Moody's ups some Alpha loans

Moody's Investors Service said it raised Alpha Natural Resources, LLC's $375 million guaranteed senior secured revolving facility due 2010 and $233 million guaranteed senior secured term loan B facility due 2012 to Ba3 (LGD3, 39%) from B1. Moody's also raised Alpha's speculative grade liquidity rating to SGL-1 from SGL-2.

The agency affirmed the B1 corporate family rating and its $175 million 10% guaranteed senior unsecured notes due 2012 at B3 (LGD5, 89%).

The outlook remains stable.

The action follows Alpha's announcement that it is increasing its senior secured revolving credit facility by $100 million to $375 million and that its parent, Alpha Natural Resources, Inc., is issuing $250 million of convertible notes and $150 million of common equity.

A portion of proceeds will be used to tender for the $175 million of 10% senior unsecured notes. The deals are intended to reduce Alpha's annual interest cost, boost liquidity and strengthen its balance sheet.

Moody's said the upgrade of the senior secured facilities reflects an enhanced loss absorption cushion afforded by a larger amount of unsecured convertible debt supporting the secured bank facilities.

Alpha's B1 corporate family rating reflects its production of high-quality thermal and metallurgical coal, its solid earnings and free cash flow, and its relatively low level of workers' compensation, black lung and other obligations, the agency said.

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