Moody's: National Waterworks outlook now stable

Moody's Investors Service said it has changed its ratings outlook for National Waterworks to stable from negative to reflect the company's decision not to significantly re-leverage its balance sheet as had been previously contemplated.

Ratings confirmed include the company's B1 rated $245 million senior secured term loan B due 2009 and $75 million senior secured revolving credit facility due 2008 as well as the B3 rated $200 million senior subordinated notes due Dec. 1, 2012.

The company had planned to issue an $80 million term loan B add-on to pay a one-time dividend. The ratings confirmations reflect expectations for stable demand for its products, a strong market position, and a more conservative dividend policy.

Moody's said the ratings are limited by National Waterworks' high leverage, a weak balance sheet with few tangible assets, and a short stand-alone operating history since being spun off from U.S. Filter in November 2002.

The ratings benefit from the company's strong competitive position as the largest distributor of waterworks transmission products in the United States and the company's good operational performance to date.

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