Moody's lifts Altra Industrial Motion to SGL-2, cuts 9% note to B2

Moody's Investors Service said it affirmed Altra Industrial Motion Inc.'s B2 corporate family and probability-of-default ratings, affirmed the £21.5 million 11¼% senior unsecured notes due 2013 at Caa1 with a revised loss-given-default assessment of LGD6 (91%), downgraded the $165 million 9% senior secured notes due 2011 to B2 (LGD3, 47%) from B3, assigned a B2 rating to the company's $105 million tack-on 9% senior secured notes due 2011 and upgraded the speculative grade liquidity rating to SGL-2 from SGL-3.

The outlook was changed to positive from stable.

The agency said the downgrade of the 9% notes reflects the company's anticipated capital structure following its planned acquisition of TB Wood's Corp. The affirmation of the corporate family rating is based on an estimated pro forma debt-to-EBITDA ratio of around 5x as of Dec. 31, which Moody's said remains solid for the B2 rating category despite the $129 million increase in debt.

Moody's said it the improvement of Altra's operating performance and financial condition prior to the TB Wood's acquisition provides some leeway within the rating category for such an acquisition. In addition, the agency believes that the TB Wood's acquisition is slightly positive as it will broaden Altra's installed base of power transmission products with a new exposure to belt drives and new adjustable speed drives.

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