S&P affirms Baxi

Standard & Poor's said it affirmed the B long-term corporate credit rating on Baxi Holdings Ltd. and removed the rating from CreditWatch with negative implications, where it had been placed on July 4.

S&P also affirmed the CCC+ second-lien secured debt rating on the £100 million mezzanine notes issued by finance subsidiary Heating Finance plc and guaranteed by Baxi and other subsidiaries.

The outlook is negative.

The agency said the affirmation follows senior lenders' consent to facility amendments proposed by the company.

S&P said the ratings reflect the group's highly leveraged financial risk profile, narrow product focus, exposure to highly competitive and fragmented markets, and weakened competitive position in its key U.K. market following a shift toward high-efficiency boiler products.

These factors are partially mitigated by Baxi's strong brand names in the U.K. and Iberian markets, S&P said.

Baxi's debt-to-EBITDA ratio is about 4.4 times in 2006.

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