Moody's rates Service Corp. note B1

Moody's Investors Service said it assigned a B1 rating to Service Corp. International's $500 million of proposed senior unsecured notes due 2014 and 2018, lowered the ratings on the company's existing senior unsecured notes to B1 from Ba3 and affirmed the Ba3 corporate family rating. The outlook is stable.

The $500 million of senior unsecured notes, along with other financing, will be used to finance the pending acquisition of Alderwoods Group, Inc. for $20.00 per share in cash. The transaction is valued at $1.2 billion, which includes approximately $350 million of Alderwoods' debt.

Service expects to fund the acquisition and financing transactions with about $570 million of cash on hand, a $150 million three-year unsecured term loan, $200 million of five-year private placement debt securities and $500 million of publicly registered senior unsecured notes. The company also received a commitment letter from JPMorgan for an $850 million bridge facility that can be used to fund the transactions.

The agency said it views the combination of Service and Alderwoods favorably, since it provides increased scale, potential for rapid debt reduction with the proceeds from asset sales and significant cost-saving opportunities. The Ba3 corporate family rating reflects Moody's expectation that Service will be able to improve credit metrics to more appropriate levels for the rating category within 18 months following the closing of the Alderwoods' acquisition through a combination of asset sales and realization of cost synergies.

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