Moody's rates Learning Care loans Ba3

Moody's Investors Service said it assigned Ba3 ratings (LGD2, 24%) to the $40 million senior secured revolving credit facility due 2013 and $175 million senior secured term loan B due 2015 of Learning Care Group, Inc. and B2 corporate family and probability-of-default ratings.

The outlook is stable.

Proceeds will help finance the acquisition of 60% of the equity by Morgan Stanley Private Equity.

Ratings are constrained by relatively high financial leverage, expectations of weak free cash flow generation and a relatively short operating history, the agency said.

The corporate family rating is supported by brand diversity, operating and margin improvements over the past five years, as well as investments in underperforming assets that resulted in improved center use, according to Moody's.

Ratings could be upgraded, the agency said, if Learning Care Group can sustain an adjusted debt-to-EBITDA ratio below 4.5 times.

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