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Moody's may cut Amscan Holding
Moody's Investors Service said it placed all ratings of Amscan Holding, Inc. under review for potential downgrade following news that the company intends to purchase Factory Card & Party Outlet, an operator of about 184 retail stores specializing in decorative party goods and social expression products, in a cash transaction for about $72 million.
Ratings on downgrade review include its $200 million secured revolving credit facility, rated Ba3 (LGD-2, 28%), $375 million secured term loan, rated B1 (LGD-3, 36%), $175 million 8 ¾% senior subordinated notes due 2014, rated Caa1 (LGD-5, 88%), B2 corporate family rating and B2 probability of default rating.
Although credit deterioration is likely to be modest, this transaction occurs very soon after the acquisitions of Party City and Party America, Moody's said, and involves the acquisition of a retailer with weak operating performance and 50% of sales from a segment outside of party goods.
Moody's said it will consider the impact of the transaction's financing plans, the amount and timing of potential post-merger operating efficiencies and operating performance expectations for the existing and newly acquired stores.
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