Moody's affirms NTK Holdings, Nortek

Moody's Investors Service said it affirmed all existing ratings of NTK Holdings, Inc. and Nortek, Inc. after considering Nortek's recent announcement that the company has taken on additional debt, not rated by Moody's, and is contemplating an initial public offering.

Proceeds from the IPO, which may follow the new debt transaction by a few months, are expected to go toward reducing Nortek's debt levels, including the $205 million of new debt.

Moody's affirmed NTK Holdings' $403 million senior discount notes due 2014 at Caa2 and corporate family rating at B2.

Moody's affirmed Nortek's $200 million senior secured revolving credit facility due 2010 at B2; $691.25 million senior secured term loan due 2011 at B2 and $625 million 8½% senior subordinated notes due 2014 at Caa1.

For the company to be upgraded, the company's financial metrics would have to be well within the parameters that are typical for a B1 rated company such that debt/EBITDA would be less than 4.0 times and free cash flow to debt be no less than 8% and Moody's said it believes that those metrics would be sustainable.

Ratings could be pressured if free cash flow to debt falls below 3% and if the company's leverage remains materially over 6 times for several quarters, the agency said.

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