Moody's assigns Brakes notes B3

Moody's Investors Service said it assigned a definitive Caa1 corporate family rating to Cucina Acquisition (UK) Ltd., the parent of Brakes Group.

Concurrently, the agency assigned a Caa1-PD probability of default rating to the company, and a definitive B3 rating to the £200 million senior secured notes due 2018 issued by Brakes Capital.

The outlook is stable.

Brakes' probability of default (Caa1-PD) is aligned with the corporate family rating, reflecting Moody's assumption of a 50% family recovery rate as is customary for capital structures including both secured bank loans and bonds.

The B3 rating of the notes incorporates the debt cushion provided by the £336 million second-lien notes, the agency said.

Brakes' Caa1 corporate family rating reflects its: (a) High pro-forma adjusted leverage ratio, above 8x at year-end 2013; (b) relative lack of scale in a low-margin industry; (c) high degree of customer concentration, with the top three customers representing about 21% of FY2012 revenues; (d) weak free cash flow generation for the foreseeable future; (e) high competitive intensity in its core markets, particularly in the UK; and (f) low geographic diversification of revenues.

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