Moody's rates Argo-Tech

Moody's Investors Service said it has assigned a prospective B3 rating to Argo-Tech Corp.'s proposed $250 million senior unsecured notes due 2011 and a prospective B1 rating to the company's proposed senior secured credit facilities, consisting of a $30 million revolver and a $15 million term loan A, both due 2009.

All existing ratings of the company have been affirmed as follows, including the senior implied rating of B2 and unsecured issuer rating of B3.

The outlook is stable.

Proceeds from the proposed transaction will be used to repay about $215 million of Argo-Tech's senior debt, including retirement of the company's $195 million senior subordinated notes due 2007 (currently rated Caa1 by Moody's) and about $20 million of existing term loans (currently rated B1 by Moody's), repay about $56 million of preferred stock held by the company's parent, Argo-Tech Holdings Corp., and for transaction fees and expenses (including about $6 million in call premium relating to the 2007 notes).

Moody's said the ratings continue to reflect Argo-Tech's high debt levels relative to its earnings and cash flows in a continued weak commercial aviation sector. The ratings also take into account the improvement in liquidity and extension of average maturity in the company's debt profile provided by the proposed facilities.

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