Moody's rates Edwards loans Ba1, B1, B3

Moody's Investors Service said it assigned provisional B1 corporate family and probability-of-default ratings to Edwards UKCo 1 Ltd. and provisional ratings to Edwards (Cayman Island II) Ltd.'s senior secured bank credit facilities, including a provisional Ba1 (LGD1, 7%) rating to its $100 million super-priority revolver, a provisional B1 (LGD3, 42%) rating to its $370 million first-lien term loan and a provisional B3 (LGD5, 80%) rating to its $245 million second-lien PIK toggle loan.

The outlook is stable.

Together with the company's management, CCMP Capital signed a definitive agreement to acquire the equipment business of BOC Edwards from Linde AG in a $1 billion transaction. The funding and additional transaction costs will be sourced from $325 million of equity, a $87 million contingent seller note and $715 million of bank debt.

The agency said the provisional B1 corporate credit rating reflects Edwards' track record of strong operational performance and free cash flow generation despite its exposure to a volatile semiconductor equipment industry, its leading market positions and strong competitive position, its continuous initiatives to reduce costs and its diversified customer base.

The rating also takes into account the high debt-to-EBITDA ratio of more than 6x at the end of 2006, the pricing pressure of the group's main customers in the semiconductor industry, the low product diversity, dependency on structural swings and the foreign exchange risk resulting from the fact that most of its revenue is billed in dollars with a significant cost base mainly in the United Kingdom, Moody's said.

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