Moody's rates AGY loans B2, Caa1

Moody's Investors Service said it assigned a B2 corporate family rating to AGY Holding Corp., a B2 to its proposed $30 million senior secured revolving credit facility, a B2 to its proposed $135 million senior secured first-lien term loan and a Caa1 to its proposed $45 million senior secured second-lien term loan. The outlook is stable.

The ratings reflect AGY's small size, significant customer and application concentration, ongoing margin compression associated with energy and input cost inflation, the weak credit quality of the company's main customers, limited history of performance subsequent to emerging from bankruptcy in April 2004 and exposure to several highly cyclical end-use markets, the agency said. AGY's ratings also reflect its substantial leverage resulting from the purchase of virtually all outstanding equity interests by equity sponsor, Kohlberg & Co.

However, Moody's said the ratings are supported by AGY's position as a competitive producer of technical grade E- glass fibers, the only North America producer of specialty S-glass, the only commercial supplier of specialty S-glass fibers globally and the leading producer of fine/extra fine glass yarns. Other factors that supporting the ratings are significant barriers to entry and extensive technological and manufacturing expertise in many specialty applications.

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