Moody's rates Radio Systems loans B1

Moody's Investors Service said it assigned a B1 corporate family rating and a B2 probability-of-default rating to Radio Systems Corp. and a B1 rating with a loss-given-default rating of LGD3 (32%) to the company's $45 million senior secured revolving credit facility due 2011 and $150 million senior secured term loan B due 2013.

The outlook is stable.

Proceeds from the senior secured credit facilities combined with a $30 million equity contribution from TSG Consumer Partners will be used to fund the acquisition of Invisible Technologies, Inc. for $163 million.

The agency said Radio System's ratings are primarily driven by the company's high leverage, modest scale, narrow product focus on the electronic pet supplies category, some customer concentration, integration risk as the company digests a company nearly half its size and potential longer-term acquisition risk as the company seeks to expand within the fragmented pet supply industry.

The ratings also reflects the company's leading market position within pet containment and training products, its extensive product portfolio with well-recognized brand names, strong operating margins in the high teens, access to low-cost sourcing through its Asian suppliers and moderate seasonality, Moody's said. The rating also recognize the benefits of the merger, which increases scale and purchasing power and improves brand awareness for Radio Systems' products.

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