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March 31, 2008 |
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IRON MOUNTAIN: Moody's Lifts Rating to B1 on Strong Performance Moody's Investors Service upgraded the Corporate Family Rating Iron Mountain Incorporated to B1 from B2. Other ratings on outstanding debt instruments were also upgraded. The outlook for the ratings is stable. Notwithstanding higher than anticipated capital expenditures and year-end compensation and benefit accruals, the upgrade recognizes continued strength in operating performance, including continued strong growth in storage revenues and improved debt maturity structure and overall liquidity following last year's refinancing activity. Importantly, the upgrade also incorporates Moody's belief that the primary focus of the company has shifted from growth through acquisitions to achieving increased operational efficiencies. Although acquisitions are likely to continue, the size of acquired entities is likely to be substantially less material in relation to Iron Mountain's size than has been the case in the past. The Corporate Family Rating of B1 is supported by the company's prominent position as a global leader in information storage and data protection, including its strategic expansion in the digital market in recent years, as well as Moody's expectation of reduced emphasis on acquisitions relative to the company's current size going forward. The ratings benefit from the company's historical revenue stability, geographical diversification and low customer concentration. The ratings continue to be constrained by high financial leverage, the significant amount of goodwill and intangibles in relation to total assets and the low level of pro forma free cash flow (defined as cash from operations less capital expenditures less dividends) relative to debt. Interest coverage for the rating category of adjusted EBITDA less capital expenditures to interest expense of 1.3 times is weak for the category. The ratings also reflect a capital intensive business with most revenues deriving from paper document storage and related services which require significant customized physical space. Moody's took these rating actions: -- Upgraded the Corporate Family Rating to B1 from B2; -- Upgraded the Probability of Default Rating to B1 from B2; -- Upgraded the US$790 million global revolving credit facility due 2012 to Ba1 (LGD2, 16%) from Ba2 (LGD2, 13%); -- Upgraded the US$410 million IMI term loan facility to Ba1 (LGD2, 16%) from Ba2 (LGD2, 13%); -- Upgraded the C$175 million 7.5% senior subordinated notes due 2017 to B2 (LGD5, 71%) from B3 (LGD4, 68%); -- Upgraded the EUR 225 million 6.75% Euro senior subordinated notes due 2018 to B2 (LGD5, 71%) from B3 (LGD4, 68%); -- Upgraded the US$72 million 8.25% senior subordinated notes due 2011 to B2 (LGD5, 71%) from B3 (LGD4, 68%); -- Upgraded the US$200 million 8.75% senior subordinated notes due 2018 to B2 (LGD5, 71%) from B3 (LGD4, 68%); -- Upgraded the US$448 million 8.625% senior subordinated notes due 2013 to B2 (LGD5, 71%) from B3 (LGD4, 68%); -- Upgraded the US$300 million 7.25% GBP senior subordinated notes due 2014 to B2 (LGD5, 71%) from B3 (LGD4, 68%); -- Upgraded the US$438 million 7.75% senior subordinated notes due 2015 to B2 (LGD5, 71%) from B3 (LGD4, 68%); -- Upgraded the US$316 million 6.625% senior subordinated notes due 2016 to B2 (LGD5, 71%) from B3 (LGD4, 68%); -- Upgraded the secured drawings under the existing shelf to (P)Ba1 (LGD2, 16%) from (P)Ba2 (LGD2, 13%); -- Upgraded the unsecured drawings under the existing shelf to (P)Ba1 (LGD2, 16%) from (P)Ba3 (LGD2, 27%); -- Upgraded the subordinated draws under the existing shelf to (P)B2 (LGD5, 71%) from (P)B3 (LGD4, 68%); -- Upgraded the preferred stock draws under the existing shelf to (P)B3 (LGD6, 97%) from (P)Caa1 (LGD6, 97%); -- Upgraded the Trust preferred stock shelf to (P)B2 (LGD5, 71%) from (P)B3 (LGD4, 68%); -- The Speculative Grade Liquidity rating is SGL-3. -- The outlook for the ratings is stable. Headquartered in Boston, Massachusetts, Iron Mountain Incorporated is an international provider of information storage and protection related services. The company offers comprehensive records management and data protection solutions, along with the expertise to address complex information challenges such as rising storage costs, litigation, regulatory compliance and disaster recovery. Founded in 1951, Iron Mountain has more than 100,000 corporate clients throughout North America, Europe, Latin America, and Asia Pacific. Revenue for the twelve months ended Dec. 31, 2007 was approximately US$2.7 billion. Iron Mountain entered the Asia Pacific region for the first time in December of 2005 through the acquisition of the Australian and New Zealand operations of Pickfords Records Management. In May 2006, Iron Mountain entered India when it formed a joint venture with Mody Access. And in June 2006, Iron Mountain expanded its presence in Australia and New Zealand with the acquisition of Melbourne-based DigiGuard. |
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