Moody's: Tech Olympic notes B2

Moody's Investors Service said it assigned a B2 rating to the new $125 million of senior subordinated notes of Technical Olympic USA Inc. and confirmed all of the company's existing ratings, including the Ba3 senior implied rating, Ba3 on the existing issue of senior notes and on the bank credit facility, B2 on the existing issue of senior subordinated notes, and the B1 issuer rating.

The outlook has been changed to stable from negative.

Moody's said the ratings reflect the company's relative newness as a combined entity and the associated integration risk which is intensified by an ongoing acquisition strategy, its still-heavy geographic concentration in Texas and Florida, and the uncertainty as to the plans of its ultimate owner, Technical Olympic SA of Athens, Greece, whose own management and requirements could change.

Moody's noted the ratings are supported by the increased size, scale, geographic diversification, and improved competitive position resulting from the combination in 2002 of Engle Homes Inc. and Newmark Homes Corp. into Technical Olympic USA Inc. In addition, the ratings acknowledge the company's conservative land policy and the strong historical financial performance of the two predecessor companies.

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