Moody's rates PCA notes B3

Moody's Investors Service said it assigned a B3 rating to PCA International LLC's proposed $50 million second-lien senior secured notes due 2009 and affirmed PCA's existing ratings. The corporate family rating (formerly known as senior implied rating) is Caa1.

At the same time, the outlook was changed to stable from negative.

Proceeds from the proposed transaction will be used to repay roughly $30 million of existing borrowings and for general working capital.

Moody's said the B3 senior secured rating reflects PCA's weak operating performance in the highly competitive and fragmented portrait retailing industry, as well as its relative seniority in the capital structure and good asset coverage. The change in outlook reflects Moody's belief that the additional liquidity provided by the proposed transaction will accord the company increased flexibility to implement its turnaround strategy of improving its operations.

Moody's rates PCA International LLC's existing $165 million senior unsecured notes due 2009 Caa2 and PCA International Inc.'s senior unsecured issuer rating Caa3.

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