Moody's rates Unifrax loan B1

Moody's Investors Service said it assigned a B1 rating to Unifrax Corp.'s new $180 million senior secured term loan due 2012. At the same time, Moody's affirmed the existing ratings of Unifrax; the senior implied rating is B1.

The outlook remains stable.

Proceeds from the new loan and available cash will be used to refinance an existing $138 million term loan and pay a dividend of about $47 million.

Moody's said the ratings consider Unifrax's moderately high leverage with pro forma debt, adjusted for the new financing, to last-12-months EBITDA of 4.2 times. The ratings also consider the modest coverage of fixed charges, the potential for weakness in the company's North American industrial furnace end-market, product concentration, continued dividend risk, and modest product liability risk.

The ratings are supported, the agency said, by the company's strong market position as a manufacturer of heat resistant ceramic fibers, the large portion of revenues derived from maintenance and refurbishment activities, the relative stability of its operating performance (despite challenging end-market conditions), the better-than-expected operating performance due primarily to organic growth and the diversity of its customer base.

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