Moody's rates Steinway loans B1, Caa1

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to KSTW Acquisition, Inc. in connection with its proposed acquisition of Steinway Musical Instruments, Inc.

At the close of the transaction, KSTW Acquisition, parent of Steinway Musical Instruments, will be merged into and renamed Steinway Musical Instruments.

Moody's assigned a B1 rating to the proposed $175 million senior secured first-lien term loan and a Caa1 rating to the $75 million second-lien tem loan.

At the same time, all of Steinway's existing ratings, including its B1 corporate family rating, were withdrawn as the previously announced tender for the $68 million of senior unsecured notes (only rated debt) was completed on July 15.

The outlook is stable.

On July 1, Steinway Musical announced that it agreed to be acquired by private equity firm Kohlberg & Co. for $438 million. The acquisition will be funded principally by a $175 million first-lien term loan, $75 million second-lien term loan and $175 million of equity contributed by Kohlberg.

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