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Moody's cuts Keystone, rates loan B2
Moody's Investors Service said it lowered the ratings for Keystone Automotive Operations Inc. in response to the company's announcement that it will buy 100% of the equity of Reliable Investments Inc. for $63 million. The agency also assigned a B2 rating to the new senior secured term loan C of the bank credit facility that will be used to help fund the transaction.
Ratings lowered included the corporate family rating to B2 from B1, guaranteed senior secured bank credit facilities to B2 from B1 and guaranteed senior subordinated unsecured notes to Caa1 from B3.
The outlook is stable.
The downgrade reflects the expected weakness in Keystone's leverage and credit metrics as a result of the acquisition and Moody's expectation that the debt reduction benefits from the anticipated synergies will not be meaningful until 2007.
The stable outlook reflects Moody's expectation that Keystone's credit metrics will remain stable as the acquisition is integrated.
The ratings reflect the expected high pro forma leverage Keystone will have subsequent to the acquisition and the challenges Keystone will face in integrating the combined companies, the agency said.
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