Moody's rates ResCare loans Ba2, notes B3

Moody's Investors Service said it assigned the new ResCare, Inc. B1 corporate family and probability of default ratings with a stable outlook and a Ba2 (LGD2, 26%) rating to the company's proposed $190 million senior secured term-loan due 2016 that will initially reside at Onex ResCare Acquisitions LLC, which will merge with and into ResCare.

Moody's said it also assigned a B3 (LGD5, 81%) rating to the $200 million of proposed unsecured notes and a Ba2 (LGD2, 26%) rating to the company's $275 million senior secured revolving credit facility due 2015.

The proceeds from the $190 million term-loan and $200 million notes are being used to fund the acquisition of ResCare, Inc. (old) by Onex Corp.

Moody's said it also affirmed the ratings of ResCare, Inc. (old), including the corporate family and probability of default ratings at Ba3, $150 million of senior unsecured notes due 2013 at B1 (LGD5, 73% from LGD5, 75%) and $275 million senior secured revolving credit facility due 2013 at Ba1 (LGD2, 16% from LGD2, 19%).

The ratings reflect the increased debt leverage associated with the Onex acquisition, ResCare's size and good geographic diversity, and its good cash flow generation.

ResCare's pro forma debt-to-EBITDA ratio for the period ended Sept. 30 was 4.7 times.

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