Moody's rates Drummond notes, loans Ba3

Moody's Investors Service said it assigned a Ba3 corporate family rating to Drummond Co. Inc. and Ba3 ratings to its proposed $400 million senior unsecured notes due 2016, $500 million five-year senior secured revolving credit facility and $200 million five-year senior secured term loan A. This is the first time Moody's has rated Drummond.

The outlook is stable.

Moody's said the ratings reflect the company's concentration of assets and cash flows, the domicile of these assets in Colombia, its private ownership structure, the high level of capital investment required to develop the El Descanso coal mine and the inherently volatile and difficult nature of the coal industry.

The ratings favorably reflect the company's production and reserves of high quality, low sulfur coal, currently favorable prices for this coal, Drummond's strong financial metrics and profitable operating history and the relatively low level of post-retirement benefits, workers' compensation and black lung obligations relative to many of its coal mining peers, the agency said.

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