Moody's rates Harrington loans B1, Caa1

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to Harrington Holdings, Inc., B1 ratings with loss-given-default assessments of LGD3 (40.56%) to the company's new $175 million first-lien term loan and $45 million first-lien revolver and a Caa1 (LGD5, 89.17%) rating to its $50 million second-lien term loan.

The outlook is negative.

Proceeds from the loans were used to finance the recapitalization of Harrington with the assistance of The Jordan Co., LP.

The agency said the B2 corporate family rating considers the company's small size and relatively high leverage, which limit its financial flexibility. The negative outlook reflects its limited cash flow, affording minimal cushion for operational missteps, and concerns regarding the possible augmentation of the company's organic growth strategy with one that involves more acquisitions under new equity sponsorship.

These concerns are partially mitigated by Harrington's historically steady operating cash flow generation, the retention of key management following acquisition, healthy diversification with respect to both products and payors and entrenched relationships with its customers, Moody's said.

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