Moody's rates Gildemeister

Moody's Investors Service said it assigned a prospective Ba3 senior implied rating to Gildemeister AG. Moody's also assigned a prospective B2 rating to the proposed issue of €175 million senior subordinated notes due 2011 and a prospective B3 unsecured issuer rating.

The outlook is stable.

The senior implied rating reflects Gildemeister's position as a leading manufacturer of machine tools combined with its strong technological expertise; the company's broad customer base and global reach; the expectation that the machine tools market will improve in 2004 and that the strong growth seen in Asia will continue; and satisfactory near-term liquidity.

Gildemeister's rating is constrained by volatility of sales and earnings resulting from the company's exposure to cyclical end industries, which is exacerbated by the fact that high cost capital purchases can be frequently delayed during weak business cycles; high product development costs; intense competition; high financial leverage and medium-term refinancing risk; and the company's exposure to foreign exchange fluctuations.

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