Moody’s rates NBTY loans B1, notes Caa1

Moody’s Investors Service said it assigned B1 ratings to NBTY, Inc.’s proposed senior secured term loans consisting of a $1.4 billion U.S. tranche and £300 million tranche.

The agency also said it assigned a Caa1 rating on the company’s proposed $1.075 billion senior unsecured notes, along with a speculative grade liquidity rating of SGL-2 to the company.

The B2 corporate family and B2-PD probability of default ratings of NBTY’s parent company, Alphabet Holding Co. , Inc., were affirmed.

The outlook also was revised to stable from negative.

Moody’s also said it affirmed NBTY’s existing secured term loan at Ba3 rating and its unsecured notes at B3 and affirmed the Caa1 rating on Alphabet’s existing unsecured notes.

The proceeds from the proposed term loans and notes, along with about $200 million of borrowing under a proposed $400 million asset-based revolver and $125 million of balance sheet cash, will be used to refinance all existing debt at NBTY and Alphabet Holdings, the agency said.

The outlook revision reflects the company’s improved liquidity profile due to the extension of its debt maturities as part of the proposed refinancing transaction, Moody’s said.

While the company’s credit metrics are weak, the agency said it expects improvement over time as the company focuses on profitable growth in its core branded consumer product portfolio and Holland & Barrett retail stores.

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