Moody's: Remington Arms outlook developing

Moody's Investors Service said it revised Remington Arms Co., Inc.'s outlook to developing from negative and affirmed its B3 corporate family and probability-of-default ratings and Caa1 (LGD4, 63%) $200 million 10½% senior unsecured notes due 2011.

The outlook revision follows Remington's announcement that an affiliate of Cerebus Capital Management, LP plans to purchase the company for $370 million, which equals an 8.7 times multiple based on EBITDA of $42.5 million for the 12 months ended Dec. 31. The transaction is expected to close in June.

The agency said the acquisition is not expected to result in higher debt levels. As part of a stock purchase agreement, the buyer has agreed to contribute equity that will pay out existing equity holders and repay about $45 million of senior notes that are obligations of RACI Holdings, Inc., Remington's direct parent.

Additionally, the buyer has obtained a financing commitment in the event that lenders require the company to repay the credit agreement or the senior unsecured notes are tendered under the change-of-control provision. Moody's understands that the buyer plans to obtain any waivers, amendments and consents needed to keep the credit agreement and senior unsecured notes outstanding.

The agency said it does not expect to downgrade the corporate family rating.

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