Moody's rates Airgas notes Ba2

Moody's Investors Service said it assigned a Ba2 rating to the $150 million senior subordinated notes due 2014 of Airgas Inc (Ba1 senior implied).

The outlook is stable.

Moody's said the Ba2 rating on the subordinated notes and Airgas' Ba1 senior implied rating reflect the relatively stable earnings and cash flow generated by its packaged gas operations, a substantial annuity in the form of cylinder rental fees, high margins on industrial and specialty gases, and the growing portion of the company's revenue from gases and rents.

The ratings are tempered by management's record of aggressive debt-financed acquisitions including the recently announced acquisition of BOC's packaged gas operations, which is expected to close in mid-2004.

Airgas' ratings also anticipate additional small acquisitions over the next 12 to 24 months. However, Moody's believes that the vast majority of the company's free cash flow will be used to repay debt. Additionally, Moody's noted that subsequent to the BOC acquisition, Airgas' debt will return to the level that existed just after the acquisition of Air Product's packaged gas operations in the first calendar quarter of 2002.

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