Moody's confirms Rayovac

Moody's Investors Service said it confirmed Rayovac Corp.'s credit ratings, including its B1 senior implied rating; B1 rating for its senior secured revolver due 2011; B1 rating for its senior secured U.S. term loan B due 2012; B1 rating for its senior secured European term loan B due 2012; B1 rating for its senior secured Canadian term loan B due 2012; B3 rating for its $700 million 7 3/8% senior subordinated notes due 2015 and $350 million 8.5% senior subordinated notes due 2013; and B2 senior unsecured issuer rating.

The move concludes the review for possible downgrade initiated on March 17 that was prompted by the company's agreement to purchase Tetra Holding GmbH for €415 million.

The B1 ratings on Rayovac's $1.5 billion senior secured credit facilities have been confirmed under this action, which subsumes the $500 million add-on senior secured term loan facilities that will be used to finance the acquisition.

Moody's said it recognizes the significant risks posed by the fully priced, debt-financed Tetra acquisition, especially given its ongoing integration challenges from other recent acquisitions. Notwithstanding these concerns, the rating confirmation and stable outlook reflect the strategic fit of this acquisition, the strong cash flow potential of the combined businesses, and the expectation that Rayovac's strategy over the coming 18 to 24 months will now shift toward organic growth, integration and debt reduction.

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