Moody's lowers KIK loans to B1

Moody's Investors Service said it lowered KIK Custom Products Inc.'s $55 million senior secured revolving credit facility due 2013 and $410 million first-lien senior secured term loan due 2014 to B1 (LGD3, 32%) from Ba3 (LGD3, 32%).

The agency also affirmed the corporate family and probability-of-default ratings at B2, affirmed the $235 million second-lien senior secured term loan due 2014 at Caa1 (LGD5) and changed the loss-given-default rate assigned to the loan to 81% from 80%.

The outlook remains stable.

Proceeds from the credit facilities, combined with $160 million of preferred and common equity, will be used to fund Caxton-Iseman Capital, Inc.'s proposed acquisition of the company for $725 million, which includes the redemption of investors' interests in KCP Income Fund.

The agency said the downgrade of the first-lien credit facilities reflects a recent change to the company's capital structure that results in a higher proportion of first-lien debt and a smaller cushion of more junior debt below it. There has been no fundamental deterioration in KIK's overall credit profile, Moody's added.

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