S&P puts Guardian Industries on watch

Standard & Poor's said it placed the A corporate credit rating on Guardian Industries Inc. on CreditWatch with negative implications.

This action follows the company's disclosure that it has agreed to sell a minority interest in the company to KGIC LLC, a subsidiary of Koch Industries Inc.

Guardian said it plans to enter into a strategic partnership with Koch via the sale of a significant minority interest. In connection with this sale, Guardian plans to significantly alter its capital structure, which will result in a significant increase in debt, S&P said.

Based on preliminary terms of the transaction, this is likely to increase debt-to-EBITDA leverage to about 3.5x compared with 1.6x as of June 30, the agency said.

Despite the increased debt levels, S&P said it believes that the investment by Koch somewhat enhances Guardian's strong business risk profile, which could benefit from Koch's very conservative financial policy and very substantial surplus liquidity.

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