Moody's gives Headwaters notes Caa2

Moody's Investors Service said it affirmed Headwaters, Inc.'s B3 corporate family rating, B3-PD probability of default rating and maintained the speculative grade liquidity rating at SGL-3.

In a related rating action, the agency assigned a Caa2 rating to the company's proposed senior unsecured notes.

The outlook is stable.

Proceeds from the notes issuance will be used for general corporate purposes including acquisitions, potential debt repurchases and to pay related fees and expenses.

Moody's said the Caa2 rating assigned to the company's proposed senior unsecured notes due 2019, two notches below the corporate family rating, reflects their structural subordination to the company's secured bank credit facilities, which currently totals about $470 million. The unsecured notes are in a first-loss position relative to the company's secured debt.

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