S&P: ON Semiconductor outlook stable

Standard & Poor's said it revised its outlook on ON Semiconductor Corp. to stable from negative and affirmed its B corporate credit rating on the company, its B senior secured rating and CCC+ subordinated debt rating.

The outlook is revised to stable from negative, recognizing partial deleveraging of the balance sheet and improving business conditions.

S&P said the ratings on ON Semiconductor reflect the company's limited debt protection measures and its position as a supplier of commodity semiconductors in a challenging operating environment, as well as adequate operating liquidity.

On Feb. 9, ON Semiconductor called for redemption of $175 million face amount of high-coupon debt using proceeds from a $238 million (gross) stock offering. Pro forma debt will be $1.25 billion, compared to $1.43 billion at Dec. 31, 2003, including capitalized operating leases.

S&P noted the company generated $212 million adjusted EBITDA in 2003, and pro forma debt to EBITDA was 6x for the year. Near-term pro forma EBITDA interest coverage is likely to be about 1.7x.

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