Moody's rates Alliance One loan B1, notes B2, B3

Moody's Investors Service said it assigned ratings to Alliance One International Inc., including a B1 rating for its $300 million secured revolving credit facility due April 2008, B2 rating for its $400 million senior notes due 2012 and 2013 and B3 rating for its $250 million senior subordinated notes due 2015. The senior implied rating is B1.

Moody's also assigned Alliance One International AG a B1 rating for its $150 million secured term loan due April 2008.

The outlook is stable.

Moody's also withdrew ratings on Dimon Inc. and Standard Commercial Corp., which were placed under review on Nov. 11, following completion of the tender offer on their bonds by both companies.

In November, Dimon and Standard Commercial announced their intent to combine under a 100% stock merger, with Dimon being the surviving corporation, which will be renamed Alliance One International Inc.

Moody's said the ratings recognize the benefits of the merger in two areas: customer relationships, and cost reduction, as well as the diversity in sourcing of the newly created company, and Moody's expectation that an overwhelming proportion of Alliance One's purchases will be backed up by customer orders. They also recognize the expected high volatility in cash flow due to unpredictable crop fluctuations and non-continuous shipments to customers, the still high bargaining power of cigarette manufacturer clients, Moody's expectation that global tobacco demand growth will be stagnant, the high debt leverage of the company, and limited debt reduction expected over the medium term.

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