S&P puts Directed Electronics on positive watch

Standard & Poor's said it placed its B+ corporate credit and senior secured credit facility ratings on Directed Electronics Inc. on CreditWatch with positive implications. The agency also affirmed the 3 recovery rating for the company's senior secured bank loan.

The CreditWatch listing reflects S&P's expectation that the company will maintain a more conservative financial policy, including a stronger balance sheet, and have greater financial flexibility following a planned initial public offering of common shares.

In addition, the financial management team has been enhanced by the addition of a new chief financial officer in preparation for the IPO and a third amendment to the company's senior credit facility that became effective on Sept. 21 enhanced Directed Electronics' liquidity by increasing the revolving credit facility commitment and the term loan size.

S&P said it expects the corporate credit and bank loan ratings to be raised to BB- if the stock offering is completed as planned and if the proceeds are used to fully prepay both the company's $37 million senior subordinated notes and $37 million junior subordinated notes.

Additional funds from the offering will be used to terminate a management agreement with Trivest Partners LP. Trivest, which bought a controlling stake in Directed Electronics in 1999, will remain a shareholder.

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