Moody's rates Acuity notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to the new $400 million guaranteed senior unsecured notes due 2019 of Acuity Brands Lighting, Inc., the principal operating subsidiary of Acuity Brands, Inc., and affirmed Acuity's Baa3 senior unsecured rating.

The outlook is stable.

Proceeds will be used to fund a tender offer for Acuity's existing $200 million of unsecured notes due August 2010 and repay a $25.3 million promissory note with the balance retained for general corporate purposes.

The agency said the issuance, tender and note repayment will produce a net increase in debt levels and the company continues to experience weak aggregate demand for its lighting products and controls.

However, Moody's views Acuity's prospective leverage and debt service coverage continuing as representative of the Baa3 rating category and said this flows from a reduction in debt levels upon the company's repayment from internal resources in February 2009 of $160 million of notes, which established some capacity for incremental debt without jeopardizing the rating despite the significant downturn in revenues and profitability the company incurred in fiscal 2009.

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