Moody's: Keystone loans B3, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Keystone Automotive Operations, Inc., a B3 (LGD4, 52%) rating to its proposed $235 million first-lien senior secured term loan due 2019 and a Caa2 (LGD6, 90%) rating to its proposed $100 million second-lien senior secured term loan due 2020. The company's $75 million asset-based revolving credit facility is not rated. The outlook is stable.

The proceeds from the term loans are expected to be used to refinance the company's existing debt and to pay a special dividend to the company's shareholders.

The agency said the B3 corporate family rating reflects Keystone's high leverage, modest size and cyclical product markets. Following the proposed balance sheet recapitalization and special dividend, Keystone's pro forma debt-to-EBITDA ratio is estimated to be 5.8 times for the last 12 months ended March 31.

The stable outlook incorporates Moody's view that Keystone's profit margins and sustainable market position should support free cash flow generation over the intermediate term, which is expected to drive debt reduction and improving debt/EBITDA leverage.

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