Moody's rates Adesa notes, loan

Moody's Investors Service said it has assigned a prospective Ba2 rating to Adesa Inc.'s proposed $500 million senior secured credit facilities and assigned a speculative grade liquidity rating of SGL-2.

More specifically, Moody's has assigned the following ratings: $150 million senior secured revolving credit facility due 2009, rated prospective Ba2; $200 million senior secured term loan A due 2009, rated prospective Ba2; $150 million senior secured term loan B due 2010, rated prospective Ba2; $150 million senior subordinated notes due 2011, rated prospective B1; a senior implied rating at prospective Ba2; and a senior unsecured issuer rating of prospective Ba3.

The outlook is stable.

Allete Inc. has announced the planned spin-off of its 100% owned subsidiary, Adesa Inc. This transaction is to include an initial public offering of less than 20% of Adesa's common stock. Following the IPO, Allete expects to distribute its remaining equity interest in Adesa to Allete shareholders.

About $150 million is expected to be raised in the IPO.

Moody's said the ratings benefit from the company's strong competitive position, important role in used vehicle redistribution, high interest coverage ratios, and recession resistance.

The ratings are constrained by a lack of a stand-alone operating track record and execution risk related to it becoming a stand-alone independent company.

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