Moody’s rates K&N Parent loans B2, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and B3-PD probability of default rating to K&N Parent, Inc.

In addition, the agency assigned a B2 rating to the company's proposed $275 million first-lien senior secured credit facility. This facility will include a $40 million five-year revolver and a $235 million seven-year first-lien term loan.

Moody's also assigned a Caa2 rating to the anticipated $110 million second-lien senior secured term loan.

Proceeds from the credit facility and term loans, along with new equity, will be used to complete the estimated $610 million acquisition of K&N by Goldman Sachs Merchant Banking Division and the management team and to refinance existing debt.

The outlook is stable.

Moody’s said the B3 corporate family rating reflects K&N's small size, lack of geographic diversification outside the U.S., narrow product focus, high customer concentration, challenging end markets and high leverage.

The ratings are supported by the company's good market position in its key products and positive free cash flow generation, the agency added.

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