Moody's downgrades Orthofix, rates loans Ba3

Moody's Investors Service said it downgraded the corporate family rating of Orthofix International NV to Ba3 from Ba2 and assigned a Ba3 rating to the proposed $375 million senior secured credit facilities of subsidiary Orthofix Holdings, Inc., which include a $45 million senior secured revolver due 2012 and $330 million senior secured term loan B due 2013.

The outlook remains stable.

These rating actions follow the announcement that Orthofix signed a definitive agreement to acquire Blackstone Medical Inc. for a total transaction value of $345 million, including fees and expenses. The agency predicted that the transaction will be financed with the proposed $330 million term loan and $15 million of cash.

Moody's said the downgrade primarily reflects a significant increase in the company's debt leverage, as measured primarily by its cash flow coverage of debt and EBIT coverage of interest expense, because the transaction is predominantly financed with the issuance of debt.

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