Moody's rates Key loans Ba2

Moody's Investors Service said it assigned a B1 corporate family rating and B2-PD probability of default rating to Key Safety Systems, Inc. and Ba2 (LGD2, 19%) ratings to its new $75 million senior secured revolving credit facility and $395 million senior secured term loan. The outlook is stable.

The proceeds from the new term loan and a portion of balance sheet cash are expected to be used to refinance Key Safety's existing first-lien and second-lien secured credit facilities. In addition, following the closing of the sale of Key Safety's Hamlin subsidiary, Moody's expects about $95 million of the sale's proceeds to be used to pay down the new term loan to $300 million. The remainder of the proceeds will be used to redeem the preferred equity at the company's holding company parent and pay a $10 million dividend to the company's common equity holders.

The agency said Key Safety's B1 corporate family rating reflects the expected improvement in credit metrics following debt paydowns. Pro forma for these transactions, the company's 2012 debt-to-EBITDA ratio is estimated at 4.2 times.

The rating also incorporates the company's modest size and EBITA margins, Moody's said.

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