S&P: Harbor Freight, loan B+

Standard & Poor's said it assigned a B+ corporate credit rating to Harbor Freight Tools USA Inc., along with a B+ rating and 4 recovery rating to its $675 million senior secured bank facilities, consisting of a $25 million revolver and a $650 million term loan.

The company used the proceeds, along with available cash, to refinance existing debt and pay about $235 million dividend to its shareholders.

The outlook is stable.

The ratings reflect the company's vulnerable business profile characterized by its still relatively weak market position in the intensely competitive and fragmented tools and equipment retailing industry, S&P said, as well as its vulnerability to commodity prices.

The proposed debt-financed $235 million dividend is indicative of a aggressive financial policy, which results in increased leverage and weaker cash flow protection measures, the agency said.

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