S&P revises ASAT Holdings outlook to stable

Standard & Poor's said it has revised the outlook on its long-term foreign currency rating on ASAT Holdings Ltd. (B/stable/--) to stable from negative.

S&P said the decision was based on improved liquidity and financial flexibility from a successful $150 million bond issue by New ASAT (Finance) Ltd., a wholly owned special purpose vehicle of ASAT. The issue will mature in 2011. The proceeds will be partially used to repay an existing $100.75 million senior note issue by ASAT, and for capital expenditures and working capital needs.

As part of a corporate restructuring program, ASAT has decided to move its Hong Kong manufacturing operations to mainland China to reduce costs and access the country's high-growth semiconductor markets. The issue has raised the funds necessary to finance the move as well as for additional expansion operations in the country.

"ASAT's improving financial profile has benefited from the recovery in the wider semiconductor industry, which has increased the company's capacity utilization and helped it return to a positive cash flow position," said Huiyi Qu, credit analyst at S&P.

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