Moody's lifts Merrill Corp.

Moody's Investors Service said it assigned a B1 rating to Merrill Corp.'s proposed $200 million senior secured credit facility and upgraded existing ratings.

Specifically, Moody's assigned a B1 rating to Merrill Communications LLC's proposed $50 million senior secured revolving credit facility and proposed $150 million senior secured term loan B. Moody's also upgraded Merrill Corp.'s $25 million class A senior subordinated notes due 2009 to Caa1 from Caa2, $121 million class B senior subordinated notes due 2009 to Caa1 from Caa2, senior implied rating to B2 from B3, and issuer rating to B3 from Caa1.

The outlook is stable.

Moody's said the upgrade reflects recent improvement in the company's core financial documents printing business, the success of its service diversification initiatives, and an improvement in its financial leverage profile. Once concluded, the proposed financing will alleviate the amortization pressure associated with the company's June 2005 maturities.

Nevertheless, Moody's noted, Merrill remains highly leveraged, competes against larger and financially stronger rivals, and its higher-margined transactional financial print business remains vulnerable to the level of business activity within the financial markets.

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