Moody's cuts IAP revolver, first-lien loan, ups second-lien loan

Moody's Investors Service said it adjusted the ratings assigned to IAP Worldwide Services Inc. in response to changes in its proposed capital structure.

The $75 million (originally $100 million) proposed first-lien revolver due 2010 was lowered to B2 from B1, the $415 million (originally $350 million) proposed first-lien term loan due 2012 was lowered to B2 from B1, the $120 million (originally $225 million) proposed second-lien term loan due 2013 was raised to B3 from Caa1 and the corporate family rating was affirmed at B2.

The outlook is stable.

The agency said the downgrades reflect the incremental increase in first-lien facilities that would now dominate the debt structure and therefore preclude notching above the B2 corporate family rating. The upward adjustment of the second-lien term loan reflects improved recovery prospects given the reduced amount of proposed second-lien debt.

Proceeds will be used to repay $378 million of debt outstanding under the existing secured credit facilities, fund a $146 million dividend to shareholders (down from $186 million), pay fees and expenses of $9 million and fund a premium of $2 million to replace the existing second-lien loan.

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