Moody’s gives Spectrum facilities B2, Caa2

Moody's Investors Service said it assigned a B3 corporate family rating and a B3-PD probability of default rating to Spectrum Holdings III Corp. (Spectrum Plastics Group).

The agency also assigned a B2 rating to the company's proposed first-lien credit facilities and a Caa2 rating to the company's proposed $160 million second-lien term loan due 2026.

Proceeds from the new term loans, along with common equity from the private equity firm AEA Investors, will be used to finance the acquisition of Spectrum by AEA in a leveraged buyout transaction.

The outlook is stable.

Moody’s said the corporate family rating reflects its high financial leverage, small scale as measured by revenue, risk that commodity-like products face greater pricing pressure and/or competition going forward, and the expectation for aggressive financial policies risk given private equity ownership.

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