Moody’s rates Tower Automotive notes B2

Moody's Investors Service said it assigned a B2 rating to Tower Automotive Holdings USA, LLC's $250 million of new senior unsecured notes.

Tower Automotive is a wholly owned indirect subsidiary of Tower International, Inc.

In a related action, the agency affirmed Tower Automotive’s corporate family and probability of default ratings at B1 and B1-PD, respectively, and raised the rating on the anticipated remaining amount of its existing senior secured term loan B to Ba3 from B1.

The speculative grade liquidity rating was affirmed at SGL-3.

The outlook is stable.

Proceeds from the new senior unsecured notes will be used prepay a portion of Tower Automotive’s existing senior secured term loan B.

Concurrent with the transaction, a new unrated $200 million senior secured revolving credit facility will be issued to replace the existing unrated $150 million asset-based revolving credit facility. The transaction is expected to subordinate a significant portion of the company's debt below the existing secured term loan, lifting its rating by one notch to Ba3. The transaction also shifts a significant portion of the company's debt into fixed-rate instruments, which would help mitigate the increase in cash interest costs if interest rates rise over the intermediate-term, Moody’s said.

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