S&P rates New ASAT (Finance) bond B

Standard & Poor's said it has assigned its B senior unsecured debt rating to a proposed $125 million senior unsecured bond issue by New ASAT (Finance) Ltd, a wholly owned special purpose vehicle of ASAT Holdings Ltd. (B/negative/--).

The bonds, which will mature in 2011, will be guaranteed by ASAT.

The proceeds will be partially used to repay an existing $100.75 million senior note issue by ASAT. The balance will be used for capital spending and as working capital, including costs incurred in relocating ASAT's operations from Hong Kong to China.

S&P said the rating on ASAT reflects the company's tight liquidity position, the highly competitive and cyclical nature of the independent semiconductor packaging industry, and the company's reliance on the troubled communications sector.

These weaknesses are partially offset by the company's improving cost structure, advanced packaging technologies, and good relationship with its customers.

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