Moody's cuts Grohe notes to Caa1

Moody's Investors Service said it downgraded the rating on Grohe AG's existing 11½% senior notes due 2010 to Caa1 from B2.

Moody's said this downgrade principally reflects the fact that following the recapitalization the rights of the existing notes have been severely restricted combined with the fact they will be effectively subordinated to the proposed notes to be issued by Grohe Holding GmbH. In Moody's view, this more than offsets the fact that the existing 11½% senior notes will be structurally prior to the proposed notes.

Concurrently Moody's assigned a B1 senior implied rating to Grohe Holding GmbH, which is the indirect owner of Grohe Water Technology AG & Co. KG following the acquisition of the company by Texas Pacific Group and Credit Suisse First Boston Private Equity.

Moody's rates Grohe Holding's senior implied rating B1, proposed €335 million of senior notes due 2014 prospective B3, Glacier Zweite Beteiligungs GmbH's €900 million of senior secured credit facilities B1 and Grohe Holdings' unsecured issuer rating Caa1. The outlook is stable.

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