Moody's rates Gavilon loan Ba3

Moody's Investors Service said it assigned a Ba3 rating to Gavilon LLC's new $900 million senior secured term loan due 2016 and affirmed its Ba3 corporate family rating.

The agency also said it downgraded the rating on the extended $2.25 billion senior secured asset-based revolving credit facility due 2013 to Ba2 from Ba1.

The proceeds will be used to repay the remaining payment-in-kind seller notes, fund the acquisition of the DeBruce Cos., and support ongoing working capital needs.

The outlook remains stable.

Gavilon's refinancing greatly expands its financial flexibility just as higher commodity prices and an early harvest have driven up working capital needs, Moody's said. The company's refinancing of the holding company notes were previously factored into the corporate family rating, the agency said.

The ratings also consider the company's modest scale relative to other rated global companies in the merchandising and distribution of agricultural commodities, Fitch said.

These negatives are offset by the relatively large amount of shareholders' equity on the balance sheet and management's desire to maintain an elevated level of financial flexibility, the agency added.

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