Moody's may up Memec, affirms Avnet

Moody's Investors Service said it affirmed the debt rating of Avnet Inc. (senior unsecured at Ba2) and placed the debt ratings of privately held Memec Group Holdings Ltd. (senior implied at B2) on review for possible upgrade following the announcement of Avnet's acquisition of Memec for $676 million in stock and cash. The outlook for Avnet is stable.

Also affirmed was Avnet's shelf registration for senior unsecured and subordinated debt rated prospective Ba2 and prospective Ba3.

On review are Memec's Caa1 senior unsecured issuer rating, B1 rated $100 million senior secured revolving credit facility and $100 million senior secured term loan A and B2 rated $100 million senior secured term loan B.

Moody's said Avnet's rating affirmation is based on the transaction's largely neutral impact on the company's credit metrics due to the significant use of stock to fund the acquisition.

The review for possible upgrade is based on the stronger credit profile of Avnet, the expected repayment of outstanding Memec debt at closing and the elimination of $459 million of Memec shareholder loans, which has placed significant strain on Memec's capital structure, Moody's said.

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