Moody's rates RLC Industries facility

Moody's Investors Service said it assigned a B1 rating to RLC Industries Co.'s proposed $250 million guaranteed senior secured revolving credit facility and a B1 rating to RLC's proposed $350 million guaranteed senior secured term loan B.

In addition, Moody's assigned a senior implied rating of B1 and senior unsecured issuer rating of B3 to RLC.

The outlook is stable.

Moody's said the rating assignment reflects RLC's relatively weak operating performance, the commodity focus of its current product mix and the challenges of moving toward a greater percentage of value-added products, significant competitive pressures from market leaders with substantially greater scale and capital resources, and the potential for capital outlays or distributions over the intermediate term.

In addition, the ratings reflect RLC's concentrated ownership and board of directors, and relatively weak corporate governance.

However, the ratings also consider the significant asset value of RLC's timberlands, a strategy of moving toward a more value-added product mix, a continued focus on cost reduction, and reasonable liquidity.

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