Moody's rates Mitchell loan

Moody's Investor Service said it assigned a B1 rating to Mitchell International Inc.'s proposed $110 million first-lien senior secured credit facilities and a B2 rating to its $45 million second-lien senior secured credit facility.

Specifically, Moody's assigned the $15 million first-lien revolver due 2009 a prospective B1 rating, the $95 million first-lien term facility due 2011 a prospective B1 rating, and the $45 million second-lien term facility due 2012 a prospective B2 rating. Moody's also assigned a prospective B1 senior implied rating and a prospective B3 senior unsecured issuer rating.

The outlook is stable.

Proceeds from the $155 million senior credit facilities will be used to finance a $110.3 million cash dividend to existing shareholders; retire existing borrowings of $23.4 million; fund a special employee bonus pool; provide working capital and pay related fees and expenses. The revolver is expected to be undrawn at closing.

Moody' said the ratings are constrained by the company's initial high leverage and relatively small revenue base. The ratings also reflect continuing pressure on the company's long standing publications business as more clients use internet-based services, limited growth opportunities and mature nature of its competitive environment. The ratings also consider recent initiatives toward yet unproven new areas.

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