DBRS Finalizes BB (high) Rating of Reliance Intermediate Holdings LP Notes

DBRS has today finalized the provisional rating previously assigned to Reliance Intermediate Holdings LP’s (HoldCo) Senior Notes at BB (high) with a Stable trend. HoldCo issued $250 million 9.50% Senior Notes (Notes) due December 15, 2019 and a provisional rating of BB (high) was assigned on July 7, 2009. For details on the assigning of the provisional rating, please see separate press release.

The offering settled on July 30, 2009. The Notes will be senior secured obligations of Reliance Intermediate and will rank equally with all of its senior indebtedness. Proceeds from the issue will be used to repay equity contributions, transaction fees and expenses as well as contribute equity to its subsidiaries.

HoldCo’s rating reflects the strong operating characteristics of HoldCo’s subsidiary Reliance LP (OpCo), largely driven by the water heater rental and HVAC businesses, which accounts for the majority of OpCo’s EBITDA, coupled with financial and structural considerations. The strength of OpCo is predominantly reflected in the stable cash flow stream generated from the water heater and HVAC business segment that services a portfolio of more than 1.2 million rental water heaters in Ontario. In addition, this segment has related commercial activities that complement the water heater rental business, including the retail sale, rental, service and maintenance, and financing of HVAC equipment. The Company’s security segment has approximately 349,000 customers providing residential and commercial electronic security system sales, installation, service, monitoring, and related commercial activities across Canada.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology used is a combination of General Rating Methodology for Non-Financial Companies and an analysis of the structure, allocation of cash-flows to senior notes as well as other structural mitigants.

This is a Corporate rating.