Moody's rates Mitel loans Ba3, B3

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to Mitel Networks Corp., Ba3 (LGD2, 27%) ratings to its $30 million first-lien senior secured revolver and $245 million first-lien senior secured term loan and a B3 (LGD5, 75%) rating to its $185 million second-lien senior secured term loan.

The outlook is stable.

The agency said Mitel's B2 corporate family rating reflects its significant initial pro-forma leverage of roughly 6x that will result from its planned acquisition of Inter-Tel (Delaware) Inc. and Moody's view that Mitel's relatively small scale, considerable exposure to rapidly changing technological trends and the intensely competitive operating environment for its core product offerings provides limited room for execution error while it completes its integration plans.

Nonetheless, Moody's also believes that the combination of Mitel's strong product portfolio and Inter-Tel's established distribution channels will provide the company with the ability to strongly defend its 20% pro-forma market share.

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