S&P affirms AGA Medical

Standard & Poor's said it removed its ratings for AGA Medical Corp. from CreditWatch, where they were placed with positive implications on Oct. 8, 2009. The B+ corporate credit rating is affirmed, and the outlook is stable.

AGA recently entered into a legal settlement agreement with Medtronic Inc. under which it will pay Medtronic $35 million over a four-year period. The agency said that while the settlement removes near-term liquidity risk (the company could have been required to post a bond in the event of an adverse court outcome), the company's scale and limited cash flow generation preclude a higher rating within one year's time.

The B+ rating on AGA reflects the company's narrow product line of medical devices, relatively modest-sized revenue base and the risks posed by competition, regulation and patent litigation, S&P said, adding that debt leverage remains aggressive.

The company benefits from a leading market presence, geographic diversity and improving operations, the agency said.

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