Moody's drops Amscan, notes

Moody's Investors Service said it downgraded Amscan Holdings, Inc.'s corporate family rating to B2 from B1 and its $175 million of 8¾% senior subordinated notes due 2014 to Caa1 from B3.

The agency noted it also affirmed the B1 and B3 ratings on Amscan's new senior secured first-lien credit facility, made up of an $85 million six-year senior secured facility and $325 million seven-year senior secured term loan, and $60 million eight-year second-lien senior secured credit facility, respectively.

Moody's said the rating actions conclude the review of Amscan's ratings initiated upon its announcement of the Party City acquisition in September.

The downgrade of Amscan's corporate family and senior subordinated notes ratings reflects the weakened financial profile resulting from the high-priced and majority debt-financed acquisition, which heightens risks associated with the timely realization of synergies, the retention of non-Party City customers and the stabilization of Party City sales and profits, Moody's added.

These risks are moderated in part by the sensible combination of the leading vendor and specialty retailer in the relatively stable party supply market and by the company's well-considered synergy, customer retention and operational strategies, the agency said, noting the outlook is stable.

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