Moody's rates Sterigenics loans B2

Moody's Investors Service said it assigned a B2 rating with a loss-given-default assessment of LGD3 (33%) to Sterigenics International, Inc.'s new credit facilities, which include a $30 million senior secured revolving credit facility due 2011 and a $290 million senior secured term loan B due 2013. Moody's also affirmed the company's B2 corporate family rating and B3 probability-of-default rating.

Proceeds of the proposed facilities will be used to fund a $75 million dividend to shareholders, including the retirement of $36 million of loan stock held at the parent holding company, and to refinance existing debt.

The agency said the ratings are supported by Sterigenics' leading market position and its ability to satisfy customer needs through the offering of alternative modes of sterilization services. The company enjoys a relatively stable business associated with a long-lived customer base for whom switching providers is difficult.

The ratings remain constrained, however, by the company's relatively small revenue base, continued customer concentration and the significant financial leverage of the company following the proposed refinancing and the conversion of a considerable amount of equity to debt through the payment of a debt-financed dividend to shareholders, Moody's said.

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