Moody's rates Wyle loans B1

Moody's Investors Service said it assigned B1 (LGD3, 39%) ratings to Wyle Services Corp.'s proposed $35 million senior secured revolving credit facility due 2019 and $250 million senior secured term loan B due 2021, changed the outlook to positive from stable and affirmed the company's corporate family rating at B2, probability of default rating at B2-PD, $35 million first-lien senior secured revolver due 2016 and $290 million first-lien term loan due 2017 at Ba3 (LGD2, 23%) and $175 million 10½% subordinated notes due 2018 at Caa1 (LGD5, 87%).

The company has announced a proposed debt refinancing transaction intended to meaningfully reduce debt, extend debt maturities and lower interest expense. The new credit facilities are intended to replace Wyle's existing $35 million revolver and, along with about $160 million of balance sheet cash, repay the roughly $220 million outstanding first-lien term loan and $175 million senior subordinated notes.

The agency said the positive outlook considers that the proposed refinancing will have a meaningfully favorable impact on the company's credit profile. The proposed transaction improves pro forma debt to EBITDA to about 4 times from slightly under 6 times, inclusive of Moody's standard adjustments.

The ratings reflect that despite continued defense budget pressures and their constraint to any meaningful revenue growth or margin expansion, the company is expected to maintain a good liquidity profile and strong credit metrics for the B2 rating category, Moody's said.

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