Moody's rates Quantum loans B1

Moody's Investors Service said it assigned B1 (LGD3, 32%) ratings to Quantum Corp.'s $50 million senior secured revolver due 2012 and $400 million senior secured first-lien term loan due 2014.

The agency also affirmed the company's corporate family and probability-of-default ratings at B3 and its $160 million convertible subordinated notes due 2010 at Caa2 (LGD6, 91%).

The outlook is stable.

The proceeds from the new term loan will refinance the company's existing $375 million secured first-lien facilities and a $125 million second-lien term loan. The agency said the refinancing has no effect on the company's B3 corporate family rating as overall leverage will decline only modestly, to about 5.9x for the 12 months ended March from about 6.1x for the 12 months ended March 2006. The absence of a second-lien term loan in the proposed structure, however, will reduce the cushion and protection for first-lien holders.

Quantum's B3 corporate family rating reflects the mature and competitive storage market it operates in, a historically challenging business mix, weak profitability and cash flow generation and high leverage relative to its business risk, Moody's said.

Positively, the agency said the rating also considers Quantum's position as the largest provider of storage systems and solutions, recent improvements in operating margins due partly to the increasing revenue contribution of its higher-margin branded business and early indications of good integration of ADIC since its acquisition in August 2006, the agency said.

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