Moody’s might lift Nortek

Moody's Investors Service said it placed Nortek, Inc.'s ratings under review for upgrade, including its B2 corporate family rating, B2-PD probability of default rating, the Ba3 rating on its senior secured term loan due 2020 and the B3 rating on its senior unsecured notes due 2021.

The review follows the company's recent announcement that it is expected to be acquired by Melrose Industries plc (unrated) for $86 per share in cash – an estimated total enterprise value of about $2.8 billion.

The SGL-2 speculative grade liquidity rating remains unchanged at this time.

The review will consider Nortek's debt capital structure and remaining protective features for each debt instrument at the close of the transaction. Moody's said its analysis considers the possibility of a multiple notch upgrade on Nortek's rated debt instruments, since Melrose Industries is a better capitalized company.

However, a more likely scenario is that Melrose Industries will pay off all of Nortek's rated debt, at which time all Nortek's existing ratings will be withdrawn, the agency added.

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