Moody's rates Innophos notes B3

Moody's Investors Service said it assigned B1 corporate family and probability-of-default ratings and an SGL-2 speculative-grade liquidity rating to Innophos Holdings, Inc. and a B3 (LGd6, 93%) rating to the company's new $66 million senior unsecured notes due 2012.

The agency also affirmed Innophos, Inc.'s $50 million guaranteed senior secured revolver due 2009 and $220 million guaranteed senior secured term loan B due 2010 at Ba1 (LGD2, 18%) and its $190 million 8 7/8% guaranteed senior subordinated notes due 2014 at B2 (LGD5, 71%).

The new notes are being issued by Innophos Holdings to refinance $61 million of debt at subsidiary Innophos Investments Holdings, Inc.

The outlook is stable.

The B1 corporate family rating reflects Moody's concerns about the company's high (albeit reduced) leverage and modest size, which are partially offset by high and stable EBITDA margins and strong cash flow for its rating category.

The rating also incorporates the potential for Mexican tax liabilities. However, the agency said it is somewhat comforted by the fact that the Mexican Tax Audit and Assessment Unit of the National Waters Commission has not requested payment or security in connection with the revoked Salt Water Claims resolutions in August 2005 and by the recent favorable New York court ruling affirming a partial summary judgment granted in 2005 to Innophos against Rhodia, SA and affiliates regarding Innophos' assertion it was entitled to be fully indemnified for claims asserted by the National Waters Commission and that Rhodia is responsible for required security.

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