Moody's rates Intcomex notes Caa1

Moody's Investors Service said it assigned Intcomex Inc. a Caa1 rating for its proposed offering of $130 million second-priority senior secured notes due 2011. Moody's also assigned a B3 corporate family rating and an SGL-3 speculative grade liquidity rating.

The outlook is stable.

Proceeds from the offering will be used to refinance existing debt of $88 million, pay $25 million of dividends to its private equity sponsor Citigroup Venture Capital and to management shareholders, and for general corporate purposes.

Moody's said the ratings reflect: (i) the company's high pro forma leverage of 4.4 times debt to EBITDA and moderate interest coverage of 2 times EBIT to interest expense; (ii) the substantial majority of revenues generated from countries in Latin America and the Caribbean that can be subject to political and economic volatility; (iii) the significant use of debt proceeds for shareholder dividend payments; (iv) the medium- to long-term potential risks of market entry by competitors; (v) limited liquidity; (vi) limited integration risks associated with the June 2005 acquisition of a Mexican distributor Centel; (vii) the company's exposure to credit risk associated with its reseller customers and (viii) moderate vendor concentration with the company's top two OEM suppliers accounting for more than 25% of sales.

According to Moody's, the ratings are supported by: (i) the company's high current gross margins in excess of 10%; (ii) the company's diversified customer and country base; (iii) currently limited competition; and (iv) the company's history of successfully increasing revenues and EBITDA at compounded annual growth rates in excess of 19% and 27%, respectively, both organically and through entry into new geographic markets, despite a number of financial crises in Latin America.

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