Moody's rates new GrafTech converts B2, upgrades notes

Moody's Investors Service said it assigned a B2 rating to a new $125 million issue of convertible debentures due 2024 offered by GrafTech International Ltd. and also upgraded to B2 from B3 its rating for the $495 million of senior notes due 2012 issued by GrafTech's finance subsidiary, GrafTech Finance Inc. GrafTech's other ratings were affirmed.

The outlook remains stable.

Moody's said its ratings reflect an improving outlook for GrafTech's core graphite electrode business, a reduction in leverage stemming from its October 2003 common stock offering, and prefunding of fines and interest related to violations of antitrust laws of the European Community.

Moody's said it believes these developments solidify GrafTech's position in the B1 senior implied rating category. In 2004, Moody's expects GrafTech will have positive cash flow from operating activities for the first time since 2001, lower its debt to EBITDA ratio to around 5x, and strengthen its liquidity profile.

The upgrade of GrafTech's senior unsecured notes reflects the improved recovery prospects for the company's unsecured debt due to its improving cash flow and the reduction of secured bank debt that accompanied its issuance of $202 million of common stock.

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