S&P lowers Metrologic outlook to negative, rates loans B+, B-

Standard & Poor's said it revised its outlook on Metrologic Instruments Inc. to negative from stable and affirmed the B+ corporate credit rating.

The revision in the outlook reflects increased leverage, to the mid-5x area from the mid-4x area, resulting from $45 million in additional debt to buy out shares held by the company's founder, as well as a redemption of preferred equity held by remaining shareholders, the agency said.

S&P noted that it also assigned a B+ rating and a recovery rating of 2 to the company's proposed first-lien facility, which amounts to $205 million, a term B loan of $170 million and an undrawn revolving credit facility of $35 million.

The refinanced $75 million, second-lien term loan is rated B-, with a recovery rating of 4, S&P added, stating that its ratings on Metrologic Instruments reflect the company's narrow business profile geared toward a competitive niche market, its second-tier status, the uncertainty because of ongoing litigation and high leverage.

These factors partly are offset by barriers to entry found in its patent portfolio and solid profitability, the agency said.

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