Moody’s rates Electrical Components, loans

Moody's Investors Service said it assigned Energy Acquisition Co., Inc. (Electrical Components International or ECI) a B2 corporate family rating and a B2-PD probability of default rating.

Concurrently, the agency assigned a B1 rating to the company's proposed $100 million senior secured first-lien revolver and $570 million senior secured first-lien term loan. It also assigned a Caa1 rating to the proposed $125 million senior secured second-lien term loan.

The outlook is stable.

Net proceeds and about $240 million of equity will be used to fund the leveraged buyout of the company by an affiliate of Cerberus Capital Management, LP, repay existing debt, and cover associated fees and expenses.

Following the buyout, all former ratings for Electrical Components International, Inc. will be withdrawn concurrent with the associated repayment of its debt obligations.

"ECI's new capital structure leaves the company weakly positioned within the B2 rating level given the very high leverage through 2019 and the potential for future debt funded dividends and acquisitions under private equity ownership,” Moody's analyst Andrew MacDonald said in a news release.

“However, the company has improved its size, capabilities, and operating margins in recent years that help offset the leveraging nature of the transaction and back our expectation of positive free cash flow generation supportive of a good liquidity profile and an ability to deleverage – key underpinnings of the credit."

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