Moody’s affirms KIK; rates Kronos loan B2, notes Caa2

Moody's Investors Service said it affirmed KIK Custom Products Inc.'s B3 corporate family rating, B3-PD probability of default rating, B2 first-lien term loan rating and Caa2 second-lien term loan rating.

The outlook remains stable.

The agency also assigned B2 and Caa2 ratings, respectively, to the proposed term loan and senior unsecured notes to be issued by Kronos Acquisition Holdings Inc., the indirect parent company of KIK.

Moody's assigned an SGL-2 speculative grade liquidity rating and a stable outlook to Kronos Acquisition and will move the B3 corporate family rating and B3-PD probability of default rating to Kronos Acquisition from KIK when the refinance transaction closes.

The agency will also withdraw KIK’s existing B2 first-lien term loan rating, Caa2 second-lien term loan rating and stable outlook at the same time.

Net proceeds from the proposed $850 million senior secured term loan B and $390 million senior unsecured notes, together with $413 million of contributed equity, primarily from Centerbridge Partners LLC, will be used to fund the acquisition of KIK from CI Capital Partners and to repay existing debt.

"While the buy-out transaction will increase KIK's leverage by almost a turn and a half of EBITDA to 8x, the affirmation of the CFR considers that EBITDA growth and modest debt repayment will enable leverage to fall within the range for the B3 rating through the next 12 to 18 months," Peter Adu, Moody's lead analyst for KIK, said in a news release.

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