Moody's rates DJO Finance loan Ba2, notes B2

Moody's Investors Service said it assigned a Ba2 (LGD 2, 17%) rating to DJO Finance LLC's $943 million senior secured credit facilities and B2 (LGD 3, 47%) rating to its $230 million senior secured second-lien notes.

Moody's affirmed the corporate family and probability of default rating at B2 and speculative-grade liquidity rating at SGL-3.

All proceeds will be used to refinance the company's existing credit facilities and retire about $210 million of the 10 7/8% senior notes due 2014.

Upon completion of the transaction, the company's $100 million revolver expiring in 2013 will be withdrawn.

The outlook was revised to negative.

The change in the outlook reflects the weakening of DJO's financial performance coupled with worsening financial metrics, Moody's said.

The company has faced recent challenges in the form of weak volumes in its recovery science division and lost sales associated with the challenges of meeting customer orders following the launch of a new ERP system, the agency said.

This has delayed the company's improvement in key credit metrics by about four quarters, Moody's said.

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