Moody's rates Oneida loan B3

Moody's Investors Service said it assigned Oneida, Inc. a B3 (LGD4, 62%) rating to its new $120 million senior secured first-lien term loan due 2013 and B2 corporate family and probability-of-default ratings.

The outlook is stable.

Proceeds will be used to refinance an existing term loan and to pay a $30 million special dividend to preferred equity holders.

This is the first time Oneida has been rated by Moody's since emerging from voluntary bankruptcy in September 2006.

Oneida's B2 corporate family rating reflects the company's lower debt obligations, stronger liquidity and improved credit metrics as a result of emerging from bankruptcy. The company cut debt by about $100 million and ended $41 million of pension plan obligations, Moody's said. Its debt-to-EBITDA ratio is about 5 times.

The rating also reflects the significant improvement in its cost structure when it shifted to an outsourced business model in March 2005, which resulted in gross margin improvement, Moody's said. Also important are the company's leading market positions in the tableware industry, its diversified customer base in both the consumer and foodservice segments, and its continued strong brand name recognition.

The rating is constrained by significant revenue declines and shifting industry trends, the agency added.

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