Moody's cuts American Reprographics, rates loan add-on Ba3

Moody's Investors Service said it lowered American Reprographics Co. LLC's $73 million senior secured first-lien term loan B due 2009 to Ba3 from Ba2, lowered the $30 million senior secured first-lien revolving credit facility due 2008 to Ba3 from Ba2, assigned a Ba3 rating to the company's $158 million add-on first-lien term loan B and affirmed the Ba3 corporate family rating.

The outlook is positive.

Proceeds from the additional first-lien term loan are expected to be used to repay all outstanding borrowings under a $158 million second-lien term loan facility due 2009.

The ratings reflect the company's leading position as a provider of document management services to the architectural, engineering and construction industry, consistent free cash flow generation and solid operating margins, the agency said.

The ratings also consider the cyclical nature of non-residential construction, pricing pressure in the highly fragmented reprographic services market, relatively low barriers to entry and geographic concentration with about 50% of revenues generated in California.

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