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Moody's may downgrade Building Materials
Moody's Investors Service said it placed on review for possible downgrade Building Materials Corp. of America's B2 corporate family and probability-of-default ratings and the company's $100 million 8% senior secured notes series B due 2007, $155 million 8% senior secured notes due 2008 and $250 million 7 ¾% senior secure notes due 2014 - each rated B3 (LGD4, 69%).
The agency said the review was prompted by Building Materials' planned acquisition of ElkCorp for $43.50 per share, or over $1 billion including assumed debt. As noted through various filings with the Securities and Exchange Commission, the company has received commitments for financing in the total amount of $1.9 billion.
In its review, Moody's will assess the company's ability to offset the acquisitions premium purchase multiples through synergies, maintain leverage below 5.5x and generate free cash flow to total debt of over 2% on an annualized basis.
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