Moody's revises Kratos to B3

Moody's Investors Service said it revised Kratos Defense & Security Solutions, Inc.'s corporate family and probability-of-default ratings, and new senior secured note ratings to B3 (LGD4, 54%) from B2 (LGD4, 54%), and kept Kratos's liquidity rating unchanged at SGL-3.

The outlook remains stable.

The actions follow the company's decision to increase the size of its note issue to $225 million from $200 million with incremental proceeds to be retained initially as balance sheet cash, according to the agency.

The rating change reflects the view that the additional capital could ultimately facilitate an accelerated acquisition strategy before Gichner Holdings is fully integrated, as well as modest incremental debt to EBITDA and higher fixed charges, Moody's said.

The higher amount of the issuance would push pro forma debt-to-EBITDA ratio to 5.5 times, the agency noted.

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