Moody's rates new Thermadyne notes Caa1

Moody's Investors Service said it has assigned a Caa1 rating to Thermadyne Holdings Corp.'s $165 million senior subordinated notes due 2014 as well as a B2 senior implied rating and a Caa2 issuer rating to the company, one of the largest manufacturers of cutting and welding products that has recently emerged from bankruptcy protection.

The outlook is stable.

Moody's said the ratings reflect significant financial and business risks in Thermadyne's post-reorganization operations, its reduced but still substantial debt leverage in the post-reorganization capital structure, a track record of poor financial performance, and the subordinated status and lack of collateral support for the notes.

The ratings further incorporate the highly cyclical nature of its revenue base and the long-term trend of a contracting U.S. manufacturing base as a result of relocation of manufacturing facilities to overseas.

On the other hand, Moody's noted, the ratings recognize Thermadyne's strong brand recognition, the improving conditions in the U.S. manufacturing sector, and the company's adequate short-term liquidity after the financing transaction.

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