Moody's rates Rain notes B1

Moody's Investors Service said it upgraded Rain CII Carbon LLC's corporate family and probability of default ratings to B1 from B2 and assigned a B1 (LGD3, 49%) rating to its $400 million proposed senior secured notes issue.

The outlook is stable.

The proceeds from the notes offering will be used to repay approximately $109 million of term loans and tender for the $235 million in subordinated notes due 2015, pay fees and expenses, and provide partial funding for the construction of two new waste-heat recovery projects at the company's Lake Charles and Robinson calcined petroleum coke plants.

The ratings reflect the company's consistent free cash flow generation, debt reduction, acceptable performance throughout the recent downturn and strong contract position for its raw material requirements, Moody's said.

The ratings are constrained by the company's relatively small size, limited operational and product diversification and negative tangible net worth, the agency said.

By year-end 2010, the debt-to-EBITDA ratio is expected to be between 3 and 3.5 times.

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