S&P: HydroChem cut to negative, notes rated B-

Standard & Poor's said it revised its outlook on HydroChem Industrial Services Inc. to negative from stable.

At the same time, S&P assigned its B- rating to HydroChem's proposed $150 million senior subordinated notes due 2013. The B+ corporate credit rating is affirmed.

If completed as proposed, proceeds from the subordinated debt issuance will be used to fund Oaktree Capital Management LLC's acquisition of HydroChem from the Sterling Group.

While HydroChem should benefit from a modest improvement to sales and profitability in 2005, S&P said the refinancing adds a material amount of leverage to the capital structure, which could prove burdensome should the company experience a cyclical downturn in its key end markets or adverse competitive conditions.

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