S&P: Kulicke & Soffa on positive watch

Standard & Poor's said it placed its B corporate credit and CCC+ subordinated ratings on Kulicke & Soffa Industries Inc. on CreditWatch with positive implications, following the company's announcements that it intends to divest its unprofitable test division and retire about $52 million of debt.

The agency noted the transactions, once concluded, will improve profitability and reduce leverage.

The test division incurred about $40 million of operating loss over the last four quarters, excluding a $100 million asset and goodwill impairment charge taken in the June 2005 quarter, S&P added.

Debt to EBITDA as of Dec. 31 was 4.4 times and pro forma for a debt reduction is 3.6 times, S&P said, noting further improvement is likely with the partial elimination of the test division losses.

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