Moody's affirms KIK Custom

Moody's Investors Service said it affirmed KIK Custom Products, Inc.'s Caa1 corporate family and probability of default ratings and its Caa2 second-lien term loan rating. Moody's also upgraded the company's senior secured first-lien debt to B2 from B3.

The outlook is stable.

KIK's operating performance, leverage and credit metrics are likely to be challenged in the near term because of escalating raw material costs, the agency said.

Although earnings improvements from a series of company-wide restructuring initiatives and better product mix under its custom division could partially offset the effects of input cost inflation, credit metrics will likely deteriorate in the next 12 months, the agency added.

KIK's ratings consider its high leverage of over 7.7 times, its participation in the highly competitive bleach segment and its relatively weak pricing flexibility due to the presence of a significantly larger, better resourced branded competitor, Moody's said.

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