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Moody's rates CDRV note Caa1, lifts VWR
Moody's Investors Service said it assigned a Caa1 rating with a loss-given-default assessment of LGD6 (92%) to the proposed $350 million senior floating-rate notes of CDRV Investors, Inc., the ultimate parent of VWR International Inc.
The agency upgraded CDRV Investment Holdings Corp.'s $481 million senior discount notes due 2015 to Caa1 (LGD5, 79%) from Caa2 and VWR International's $175 million senior secured euro term loan, $415 million senior secured guaranteed dollar term loan due 2009 and $150 million senior secured guaranteed revolver due 2009 to Ba2 (LGD2, 12%) from Ba3 (LGD2, 24%), $200 million 6 7/8% senior unsecured guaranteed notes due 2012 to B1 (LGD3, 40%) from B3 (LGD4, 67%) and $320 million senior subordinated unsecured notes due 2014 to B3 (LGD4, 62%) from Caa1 (LGD6, 90%).
VWR International's B2 corporate family rating was affirmed, and the outlook is stable.
The proceeds from the notes will be used to fund $344 million of cash distributions to shareholders.
Despite the increase in leverage and deterioration in the company's cash flow coverage of debt, Moody's said it affirmed the B2 corporate family rating due to the recent expansion in operating margins and operating cash flow as well as the repayment of over $100 million of debt in the past nine months. The agency believes that the company's expansion of operating cash flow offsets the significant increase in outstanding debt from the proposed recapitalization.
The agency predicted that the company's leverage and financial policies, along with the low operating margins, will continue to constrain the rating. Following the recapitalization, the company's adjusted debt-to-EBITDA ratio will increase to 8.1x from 6.6x.
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