S&P assigns KAR notes CCC

Standard & Poor's said it assigned its CCC rating to KAR Holdings Inc.'s proposed $1.1 billion of unsecured and subordinated debt, which will be issued in three tranches: a $600 million fixed- and floating-rate senior notes due 2014; and $500 million senior subordinated notes due 2015.

The two-notch disparity between the B- corporate credit rating and the rating on the proposed unsecured notes reflects the presence in KAR's capital structure of senior secured indebtedness which disadvantages the unsecured debt, the agency said.

The disadvantage to the senior unsecured debt holders is reflected by priority claims to adjusted assets of more than 30%, S&P noted.

Proceeds from the notes will be used in conjunction with KAR's proposed $1.79 billion senior secured credit facility to fund a merger transaction that will combine Adesa Inc. and Insurance Auto Auctions Inc. to become KAR Holdings Inc., the agency added.

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