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05 Nov 2009
Approximately $2 billion of rated securities affected
New York, November 05, 2009 -- Moody's Investors Service affirmed Service Corporation International's
(SCI) Ba3 Corporate Family Rating and SGL-2 speculative grade liquidity
rating, assigned a B1 to $150 million of proposed senior
notes and assigned a Baa3 to a proposed $400 million revolving
credit facility. The rating outlook remains stable.
On October 15, 2009, SCI announced that it entered into an
agreement to acquire Keystone North America Inc. for a total estimated
transaction value of approximately $256 million (including Keystone's
outstanding debt). The transaction is anticipated to close in the
first quarter of 2010, subject to customary closing conditions.
SCI intends to use the proceeds from the $150 million senior note
offering, borrowings under the $400 million revolving credit
facility and cash on hand to fund the Keystone acquisition, repay
the $150 million of guaranteed senior notes due 2011 and pay fees
and expenses. Moody's views the acquisition favorably since
Keystone has a solid track record of financial performance and the acquisition
increases SCI's scale in rural and suburban markets. The
acquisition should modestly increase pro forma financial leverage at closing.
The Ba3 corporate family rating reflects the company's leading market
position and large portfolio of funeral and cemetery properties,
broad geographic diversification within North America, adequate
financial strength metrics for the rating category and stable cash flows
supported by a large backlog of preneed funeral and cemetery contracts.
The ratings are constrained by weak funeral volume trends, a steady
increase in cremation rates, and the risk that a difficult environment
for consumer spending could lead to weak demand for pre-need cemetery
The affirmation of the SGL rating anticipates a good liquidity profile
with strong projected cash flow, ample availability under a $400
million revolving credit facility and adequate expected headroom under
Moody's assigned the following ratings (assessments):
$150 million senior unsecured notes due 2021, B1 (LGD 4,
$400 million senior unsecured revolver (guaranteed) due 2013,
Baa3 (LGD 1, 8%)
Moody's affirmed the following ratings (assessments):
$32 million 7.875% senior unsecured debentures due
2013, B1 (LGD 4, 63%)
$250 million 7.375% senior unsecured notes due 2014,
B1 (LGD 4, 63%)
$160 million 6.75% senior unsecured notes due 2015,
B1 (LGD 4, 63%)
$245.5 million 6.75% senior unsecured notes
due 2016, B1 (LGD 4, 63%)
$295 million 7% senior unsecured notes due 2017, B1
(LGD 4, 63%)
$250 million 7.625% senior unsecured notes due 2018,
B1 (LGD 4, 63%)
$200 million 7.5% senior unsecured notes due 2027,
B1 (LGD 4, 63%)
$300 million senior unsecured revolver (guaranteed) due 2011,
Baa3 (LGD 1, 8%)- rating is expected to be withdrawn
upon completion of refinancing
$150 million senior unsecured notes (guaranteed) due 2011 at Baa3
(LGD 1, 8%)- rating is expected to be withdrawn upon
completion of refinancing
Corporate family rating, Ba3
Probability of default rating, Ba3
Speculative grade liquidity rating, SGL-2
For further information, see SCI's credit opinion on Moodys.com.
The last rating action on SCI was on November 25, 2008 at which
time Moody's affirmed SCI's Ba3 Corporate Family Rating and lowered
the speculative grade liquidity rating to SGL-2 from SGL-1.
Moody's concurrently affirmed the Ba3 Probability of Default Rating,
the Baa3 rating on SCI's guaranteed credit facility and guaranteed senior
notes, and the B1 rating on its non-guaranteed senior notes.
The principal methodology used in rating SCI was the Global Business &
Consumer Service Industry methodology, which can be found at www.moodys.com
in the Rating Methodologies sub-directory under the Research &
Ratings tab. Other methodologies and factors that may have been
considered in the process of rating this issuer can also be found in the
Rating Methodologies sub-directory on Moody's website.
Service Corporation International is North America's largest provider
of deathcare products and services with revenues of about $2.1
billion in the twelve month period ended June 30, 2009. At
June 30, 2009, SCI operated 1,264 funeral service locations
and 365 cemeteries in North America.
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Moody's rates Service Corp's new senior notes B1; upsized revolver Baa3
Lenny J. Ajzenman
Senior Vice President
Corporate Finance Group
Moody's Investors Service
No Related Data.
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