S&P affirms H3C

Standard & Poor's said it affirmed its BB- long-term corporate credit rating on H3C Holdings Ltd., affirmed its $430 million senior secured credit facility at BB and revised the recovery rating to 2 from 1.

The outlook is stable.

The agency said the revised recovery rating reflects revisions to its issue rating framework and recovery rating scale in 2007, and the affirmation reflects the fact that H3C's performance is largely in line with S&P's expectations.

The ratings reflect the weak business risk profile of H3C's parent, 3Com Corp., strong competition and customer and geographic concentration, S&P said.

These weaknesses are partly offset by the company's good market position and good growth potential in China, the agency said, adding that cash flow generation remains robust despite slower sales growth. The company also made a voluntary early loan repayment of $35 million in the first quarter of 2008.

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