Moody's ups MD Beauty first-lien loan to B1

Moody's Investors Service said it affirmed the B2 corporate family rating of MD Beauty Inc., upgraded the company's first-lien term loan facilities to B1 from B2 and affirmed its B3 second-lien facility following the company's launch of $178 million in add-on term loan facilities that will fund a distribution to shareholders.

More specifically, Moody's upgraded the $15 million senior secured first-lien revolver due 2011 to B1 from B2 and the $237 million senior secured first-lien term loan facility due 2012 to B1 from B2 and affirmed the $146 million senior secured second-lien term loan facility due 2013 at B3.

The outlook remains stable.

Despite the substantial increase in debt and the rapid releveraging of recent earnings gains, the ratings affirmation reflects the company's strong operating momentum; its improved scale, brand identity and market position; and its improving managerial and operational resources, Moody's said.

The upgrade of first-lien debt recognizes that second-lien lenders are providing the majority of incremental borrowings. As such, the first lien represents a relatively lower percentage of the capital structure and needs a lower multiple of last-12-months EBITDA to be fully covered as compared to Moody's original ratings assignment.

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