Moody's rates ATI loan B1

Moody's Investors Service said it assigned B1 ratings to the proposed senior secured credit facilities of ATI Acquisition Co.

Concurrently Moody's assigned B2 corporate family and probability of default ratings to ATI. The outlook is stable.

Along with a Caa1-rated $65 million mezzanine tranche and an additional equity contribution, the capital will finance the acquisition of ATI Enterprises, Inc. by a BC Partners, Inc. fund.

Moody's said the ratings are constrained by ATI's limited scale and diversification in comparison to other, national for-profit higher education companies, relatively high financial leverage, expectations of weak free cash flow generation in the near term, and the potential for reversals in recent growth as the economy strengthens.

Nonetheless, the corporate family rating of B2 is supported by ATI's recent record of strong execution, increases in enrollments, relatively high placement rates for its students and declining cohort default rates, albeit from very high levels.

More specifically, Moody's assigned a B1 (LGD 3, 35%) to ATI's $35 million revolving credit facility due 2014, a B1 (LGD 3, 35%) to the $165 million term loan B due 2014 and a Caa1 (LGD 5, 88%) to the company's $65 million senior subordinated facility due 2015.

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