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S&P rates AT Holdings notes B-
Standard & Poor's said it affirmed its ratings, including the B+ corporate credit rating, BB senior secured debt rating and B unsecured debt rating, on Argo-Tech Corp. and removed the ratings from CreditWatch, where they were placed with negative implications on Sept. 14.
At the same time, S&P assigned its B+ corporate credit rating to Argo-Tech's parent, AT Holdings Corp., and its B- rating to the proposed $50 million senior discount notes due 2012 to be issued by AT Holdings.
The outlook on both entities is stable.
AT Holdings is to be acquired by VGAT Investors LLC, a new entity formed by the private equity firms Greenbriar Equity Group and Vestar Capital Partners. The $450 million transaction value, including fees and expenses, will be funded by the proposed $50 million senior discount notes, a $5 million add-on to Argo-Tech's existing term loan and $120 million of equity from the new owners and current management. The existing $250 million unsecured notes will remain outstanding, if the proper consents are received from noteholders.
S&P said the ratings on Argo-Tech reflect participation in the cyclical and competitive commercial aerospace industry and high financial risk due to a sizable debt load. Those factors are offset somewhat by the company's established positions in niche markets and solid profit margins.
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