Moody's affirms Water Pik

Moody's Investors Service said it affirmed Water Pik, Inc.'s B2 corporate family rating and assigned a B2 (LGD3, 34%) rating to the company's proposed senior secured credit agreement, consisting of a $20 million revolving credit facility due 2016 and a $177 million term loan due 2017.

Proceeds from the proposed credit facility and cash on hand will be used to refinance existing debt and pay a $145 million dividend.

Moody's changed the probability of default rating to B3 from B2. The outlook remains stable.

The ratings reflect the company's relatively high pro forma leverage with a debt-to-EBITDA ratio exceeding 4.5 times, pro forma debt levels that exceed revenues and aggressive financial policy given the magnitude of the proposed dividend, which removes the original equity that was infused at the time of the 2007 recapitalization, the agency said.

The ratings consider the company's modest scale, narrow product focus, some customer concentration with the top three customers accounting for a meaningful portion of revenues, limited presence at key mass merchandiser customers relative to larger packaged good companies and exposure to consumer discretionary spending trends, the agency added.

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