Moody's rates Medical Specialties loans B3

Moody's Investors Service said it assigned ratings to Medical Specialties Distributors, LLC, including a B3 corporate family rating, Caa1-PD probability of default rating and a B3 rating on the proposed $170 million senior secured credit facilities.

The outlook is stable.

The proceeds, along with a significant equity contribution, will be used to fund New Mountain Capital, LLC's acquisition of the company.

Moody's said the B3 corporate family rating reflects its relatively small revenue base and low operating margin, considerable leverage and modest free cash flow. In addition, the rating incorporates the company's limited business line diversity and high concentration in its supplier and customer base, which remains very fragmented and makes it susceptible to new competition.

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