Moody's rates Oxbow loans B1

Moody's Investors Services said it assigned B1 corporate family and probability-of-default ratings to Oxbow Carbon and Minerals Holdings LLC and B1 (LGD3, 49%) ratings to the company's $150 million senior secured revolving credit agreement and $960 million senior secured term loan B.

The outlook is stable.

Proceeds will be used to fund Oxbow's acquisition, through its wholly owned subsidiary Oxbow GLC Canada Acquisition ULC, of the assets of Great Lakes Carbon Income Fund and all of the other outstanding common shares of GLC Carbon USA Inc. Proceeds will also be used to refinance existing debt and for general corporate purposes, which may include future acquisitions.

The agency said the B1 corporate family rating reflects the leverage being incurred in this transaction, with the debt-to-EBITDA ratio in the mid 4x range on a 2006 pro forma basis; the volatility inherent in the petcoke and aluminum markets; and Oxbow's modest although relatively stable operating margins.

The rating also considers the strategic benefits of Oxbow's expansion into the production of calcined coke, the benefits its distribution business and petcoke procurement levels bring to GLC, Oxbow's global footprint of distribution into the petcoke markets and other fuel markets and synergies that can be achieved over the medium term, Moody's said.

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