Moody's rates Day International loans B1, B2, ups outlook

Moody's Investors Service said it assigned a B1 rating to Day International Group Inc.'s proposed $275 million first-lien credit facilities - consisting of a $25 million revolver due 2011 and a $250 million term B loan due 2012 - and a B2 rating to its proposed $140 million second-lien term loan due 2013.

Moody's said it also raised to Caa1 from Caa3 the existing $62.6 million 12¼% senior exchangeable preference stock due 2010 and affirmed both the B1 corporate family rating and Caa1 rating on the $114.9 million issue of 9½% guaranteed senior subordinated series B notes due 2005.

The outlook was revised to stable from negative.

Proceeds from the proposed first- and second-lien term facilities are intended to recapitalize the company and to pay related fees and expenses.

Moody's said these actions acknowledge Day International's continued leadership position in its principal market segments, consistent performance, the successful integration of the NDI acquisition and its continued ability to pass on cost increases relating to raw materials to its customers.

The ratings are constrained by the company's high financial leverage, the high percentage of sales and tangible assets in non-guarantor subsidiaries, heavy reliance for continued cash generation on a mature industry and the potential for disruption to the company's cash flow generating capability if ongoing growth in digital technologies begins to offer effective competition to offset printing in the high-speed, long-run segment of the industry, the agency said.

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