Moody's rates Del Monte loans Ba3

Moody's Investors Service said it confirmed Del Monte Corp.'s Ba3 senior secured debt and corporate family ratings and B2 subordinated debt rating, affirmed the company's SGL-2 speculative grade liquidity rating and assigned Ba3 ratings to the company's new $330 million senior secured term B loan due 2012, $595 million senior secured term B loan due 2012 and the $50 million increase to $400 million of the company's senior secured revolving credit facility due 2011.

These actions follow the company's announcements that it will acquire the Meow Mix Co. for about $705 million in cash and the Milk Bone pet treat business from Kraft Foods for roughly $580 million in cash. This concludes the review for possible downgrade begun on March 17, and the outlook is stable.

Moody's said the confirmation reflects Del Monte's history of delevering in a timely manner, management's ability to successfully integrate acquisitions and Del Monte's well-known and diverse brand portfolio that spans several food categories.

The agency further said it views these acquisitions as making strategic sense. By adding these two companies, Del Monte continues its strategic initiative of becoming a higher-margin branded consumer packaged foods company.

It does, however, result in higher leverage, integration risk and limits the company's financial flexibility over the near term, Moody's added.

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