Moody's rates MemberWorks notes

Moody's Investors Service said it has assigned a B2 rating to MemberWorks Inc.'s proposed $150 million senior unsecured notes due 2014 and assigned a speculative grade liquidity rating of SGL-1. The senior implied rating is B1, and the senior unsecured issuer rating is B3.

The outlook is stable.

Moody's noted the ratings and outlook reflect the company's high leverage levels, high customer churn, and slow growth. The ratings also consider the company's long business track record, extensive vendor network, recurring revenue base, and a strong competitive market position in the innovative membership program field.

Proceeds from the $150 million senior unsecured notes and from the $45 million senior secured revolving credit facility (not rated by Moody's) will be used to fund the purchase of Lavalife Inc., provide substantial liquidity, and finance transactions costs.

Additionally, Moody's does not rate the company's existing $90 million 5.5% convertible senior subordinated notes due 2010, which are privately held.

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