Moody's rates EPD loans Ba3, Caa1

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to EPD Inc., a division of the Goodyear Tire & Rubber Co., a Ba3 rating (LGD3, 31%) to the company's proposed $650 million seven-year first-lien term loan, $100 million six-year senior secured revolving credit facility and seven-year $100 million delayed-draw term loan, as well as a Caa1 rating (LGD5, 81%) to the proposed $410 million eight-year second-lien term loan.

The outlook is stable.

The B2 corporate family rating represents the company's high pro forma leverage, which was 6.9 times debt to trailing 12-month EBITDA as of March 31. The ratings also consider the company's modest cash flow to debt metrics, its exposure to volatile end-user markets and the fact that EPD has no track record as a standalone entity, Moody's said.

The ratings also reflect the company's solid market positions, customer diversity, the Goodyear brand, the company's large installed base of products and extensive distribution footprint, the agency said. The rating also considers the cost-cutting efforts initiated under Goodyear's ownership and free cash flow generation.

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