Moody's rates Metals USA notes B3

Moody's Investors Service said it assigned a B1 corporate family rating to Metals USA, Inc., which is being acquired by Apollo Management through its subsidiary Flag Acquisition Corp.

Moody's said it assigned a B3 rating to a proposed $275 million senior secured notes and assigned an SGL-2 rating to Metals USA.

Ratings assigned include a B3 rating to the senior secured floating-rate notes due 2012, a B3 rating to the senior secured fixed-rate notes due 2015, a B1 corporate family rating and an SGL-2 speculative grade liquidity rating.

The outlook is stable.

The ratings reflect Metals USA's high leverage upon completion of the leveraged buyout, the potential to materially increase debt and make equity distributions subject to the restrictions contained in its debt agreements and the sensitivity of the company's metals distribution business to variations in demand for steel and other metals, fluctuating metals prices and international market pressures, Moody's said.

The ratings positively reflect the company's geographic and customer diversification and its currently solid financial performance in all of its segments, but most notably the metals distribution segments, Moody's said.

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