Moody's reviews Orthofix

Moody's Investors Service said it placed the ratings of Orthofix International NV and its subsidiary Orthofix Holdings Inc. under review for downgrade.

Under review are Orthofix International's Ba3 corporate family rating and B1 probability-of-default rating, as well as Orthofix Holdings' Ba3 (LGD3, 34%) ratings for $45 million senior secured revolver due 2012 and $330 million senior secured term loan due 2013.

The review for downgrade reflects weak cash flow generation compared with expectations when Orthofix acquired Blackstone Medical, Inc. in September 2006, according to the agency.

Moody's said it acknowledges Orthofix's history of debt repayment, moderate leverage and good liquidity, but that it believes certain financial metrics may no longer be consistent with the current rating.

The review reflects an acquisition appetite that may be increasing and litigation risk, Moody's said.

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