Moody's: ADS at B2, notes B3

Moody's Investors Service said it assigned a B3 rating to ADS Tactical Inc.'s proposed senior secured notes due 2018, along with corporate family and probability of default ratings of B2 and a speculative-grade liquidity rating of SGL-3.

The outlook is stable.

The ratings reflect the substantial debt levels that the company will undertake to fund a sizeable distribution to its owners, Moody's said, as well as an aggressive dividend policy that ADS intends to pursue over the near term.

The ratings also negatively consider the lack of diversity in the company's customer base, as ADS is highly reliant on the U.S. Department of Defense for almost 90% of its revenue, the agency said.

Moody's said it believes the company's revenue base is highly exposed to changes in defense spending levels.

Supporting the ratings are the favorable margins that ADS currently generates from its operations, which result from strong growth and execution of its niche Department of Defense brokerage and logistics business model, the agency said.

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