Moody’s cuts Lexmark debt, rates CFR Ba2

Moody's Investors Service said it downgraded Lexmark International, Inc.'s senior unsecured debt ratings to Ba2 from Baa3 and assigned a Ba2 corporate family rating and a Ba2-PD probability of default rating.

The ratings remain on review for downgrade pending further clarification of the security package that the existing senior note holders will receive, as well as the timing and use of proceeds from the proposed sale of the company's Enterprise Software unit.

Moody's noted that the company's existing $400 million senior unsecured notes, due 2020, will remain outstanding if holders do not tender the notes to the company under the change of control provisions. The agency understands that despite not being subject to public filing requirements going forward, Lexmark will continue to provide audited financial statements. As part of the closing, the company's notes due 2018 were legally defeased, and the rating was withdrawn.

Moody’s said the action follows the closing of the acquisition of Lexmark by a consortium of investors led by Apex Technology Co., Ltd., PAG Asia Capital and Legend Capital Management Co., Ltd. The company arranged for more than $2 billion in new debt financing to help fund the $3.6 billion acquisition. Lexmark's new owners' financial policies will incorporate higher financial leverage, which is more consistent with a speculative grade profile.

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