S&P ups Reddy Ice outlook to stable

Standard & Poor's said it revised its outlook on Reddy Ice Holdings Inc. and its operating subsidiary, Reddy Ice Group Inc., to stable from negative and affirmed the company's B+ corporate credit rating, B- senior unsecured discount notes and Reddy Ice Group's B+ senior secured bank loan with a recovery rating of 3.

The agency said the revised outlook reflects Reddy Ice's enhanced financial profile and credit measures, resulting from improved operating performance, in addition to lower debt levels following the paydown of debt subsequent to the company's initial public offering in 2005.

S&P said the ratings reflect the company's narrow product focus, its participation in the highly fragmented and competitive packaged ice industry, the seasonal nature of demand for its products and an aggressive shareholder-oriented financial policy through a commitment to substantial dividends via its recent IPO.

The ratings are supported by strong financial performance in fiscal 2005, the agency said. For the past 12 months ended March 31, total revenue increased by 13% to about $325 million and EBITDA margins have remained in the 26%to 27% range.

Lease-adjusted total debt to EBITDA was about 4.5x at March 31.

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