Moody's cuts Springs Window loans to B1

Moody's Investors Service said it downgraded Springs Window Fashions, LLC's $100 million senior secured revolver due 2010 and senior secured term loan B due 2012 to B1 (LGD3, 34%) from Ba3 (LGD 2, 29%) following a $75 million proposed increase in the term loan B to $311 million.

The B1 corporate family rating and B2 probability-of-default rating were affirmed.

The outlook is stable.

Proceeds from the $75 million add-on term loan will be used to pay a $50 million dividend to shareholders, to repay existing borrowings under the $100 million revolving credit facility and to pay fees and expenses relating to the transaction.

The agency said the downgrade of the loans reflects the higher proportion of secured bank debt in the company's liability structure. The ratings remains constrained by high leverage and by Moody's expectation of a negative adjusted free cash flow-to-debt ratio for fiscal 2007 as a result of legacy cash outflows relating to the former textile operations of the parent, Spring's Industries, Inc.

The ratings are supported by Springs Window Fashion's consistent historical revenue and EBITDA growth, by the company's size, market position and strong market share, by the geographical diversity of its end-users and by the value of the company's brands, Moody's said.

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