Moody's rates Kinetic Concepts loans Ba1

Moody's Investors Service said it affirmed Kinetic Concepts, Inc.'s corporate family rating at Ba2, changed the probability-of-default rating to Ba2 from Ba3 and assigned Ba1 (LGD3, 32%) ratings to the company's proposed $1.3 billion senior secured first-lien credit facility, consisting of a $1 billion term loan A due 2013 and a $300 million revolving credit facility due 2013.

The outlook is stable.

The proceeds of the proposed credit facility will be used to finance the acquisition of LifeCell Corp. and to repay amounts outstanding under Kinetic Concepts' existing $500 million senior secured revolving credit facility due 2012, which has a Ba2 (LGD3, 34%) rating.

The agency said the revision of the probability-of-default rating reflects the introduction of unsecured debt into the capital structure, which led to changes in assumptions for asset recovery and a lower implied likelihood of default.

The new credit facility is rated one notch higher than the corporate family rating because it benefits from the first loss absorption that will be provided by the recently issued $600 million 3.25% unsecured convertible notes, Moody's said.

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