Moody's rates TransDigm notes B3

Moody's Investors Service said it assigned a B3 rating (LGD5, 77%) to TransDigm, Inc.'s proposed $425 million senior sub note issue due July 2014.

Moody's also affirmed the B1 corporate family and probability-of-default ratings, and the B3 rating B3 (LGD5, 77%) on the existing $575 million 7¾% senior sub notes due July 2014, and upgraded the rating on the $980 million senior secured facility to Ba2 (LGD2, 21%) from Ba3 (LGD2, 29%).

The outlook remains stable.

Proceeds will be used to pay a dividend to shareholders and management through a dividend equivalency program.

The B1 rating considers TransDigm's strong revenue growth and operating profitability driven by its broad niche product mix and its high margin aftermarket focus, product position on most aircraft, and the proprietary and sole source nature of most of its product offering, the agency said.

Ratings benefit from the company's high degree of financial flexibility with its very good liquidity profile supported by a substantial cash position and an undrawn $200 million revolver, the agency noted.

Ratings are constrained by the increase in leverage and high absolute debt level, with total debt-to-EBITDA ratio rising to about 4.8x on a gross debt basis and about 4.3x on net debt basis, Moody's said.

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