Moody's cuts MAAX ratings, rates discount notes Caa1

Moody's Investors Service said it lowered the senior implied rating of MAAX Corp. to B2 from B1 and the issuer rating to Caa1 from B2 and reassigned both ratings to MAAX Holdings Inc. from MAAX Corp.

Moody's also assigned a Caa1 rating to MAAX's $110 million senior discount notes due 2012 and affirmed the B1 senior secured and B3 senior subordinated ratings of MAAX Corp. At the same time, Moody's assigned an SGL-2 speculative grade liquidity rating to MAAX and withdrew the B1 senior implied, B2 issuer rating, and SGL-2 speculative grade liquidity rating of MAAX Corp.

The outlook is stable.

MAAX will use the proceeds from the discount notes, net of transaction fees, to fund a special dividend to the firms' equity investors, including J.W. Childs, Borealis, OMERS, and management.

The downgrade of the senior implied rating to B2 from B1 reflects Moody's view that the additional $110 million of debt associated with the transaction results in consolidated credit statistics inconsistent with a B1 rating and significantly leverages MAAX's balance sheet without any incremental benefit to operating earnings or asset values. In addition, Moody's believes the rapid accretion of the discount notes will challenge MAAX's ability to meaningfully improve consolidated credit statistics over the medium-term.

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