Moody's: American Safety Razor cut to stable

Moody's Investors Service said it affirmed the B2 senior implied rating of American Safety Razor Co., but revised the company's to stable from positive following its announced plans to launch new senior secured debt facilities to fund a $92 million dividend and refinance existing debt.

The proposed $225 million first-lien facilities were assigned a B2 rating, and the $87.5 million second-lien term loan was rated Caa1.

Moody's noted that the increased leverage at a time of heightened spending behind new product launches and capacity expansion programs will weaken credit metrics and limit prospective debt reduction, thereby delaying upward rating pressure.

The outlook revision from positive to stable reflects a deceleration of the time-frame over which Moody's is likely to consider a ratings upgrade, given the significant leverage increase (from 3.5x EBITDA to 5.0x) and the depletion of capital at a time of major new product and capital spending initiatives.

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