Moody's rates Maidenform loan

Moody's Investors Service said it assigned a rating of Ba3 to Maidenform Inc.'s proposed $130 million guaranteed senior secured credit facility due 2010 and a B2 to the proposed $50 million guaranteed senior secured second lien term loan due 2011.

The company was assigned a senior implied rating of Ba3 and an unsecured issuer rating of B3.

The outlook is stable.

Proceeds from the contemplated debt financings, along with other investment capital, will be used to finance the acquisition of Maidenform Inc. for about $223 million (subject to working capital adjustments). Specifically, the proceeds will be used to refinance existing debt of $54 million, purchase common shares for $161 million (including rollover amounts) and pay fees and expenses of $8 million.

Moody's said the rating reflects the high leverage of 4.5 times pro forma total debt to last 12 months ended March 27, 2004 EBITDA; negative tangible equity and moderate pro forma fixed-charge coverage.

The rating is supported by the positive contributions of new management which has generated a steady improvement in sales, operating margins and cash flow; created a diversified brand and distribution channel strategy; shifted from 100% domestic manufacturing to a high percentage of foreign-sourced product; and installed fully integrated financial and inventory systems and controls which, along with a significant SKU rationalization, improved inventory management and reduced working capital needs.

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