S&P rates Accellent loans BB-, notes B-

Standard & Poor's said it assigned a BB- rating with a recovery rating of 1 to Accellent Inc.'s $375 million secured term loan B and $75 million revolving credit facility and a B- rating to the company's $325 million fixed-coupon senior subordinated notes.

S&P said it also affirmed its ratings on Accellent, including the B+ corporate credit rating, and removed them from CreditWatch, where they were placed with negative implications Oct. 11 following the company's acceptance of a $1.27 billion buyout offer by Kohlberg Kravis Roberts & Co.

The outlook is stable.

The acquisition will be financed with $700 million of debt and $640 million of equity; outstanding debt will be retired. Although this transaction will increase prior debt levels by about $250 million, the agency said Accellent's business profile has strengthened since its acquisition of MedSource Technologies Inc. in mid-2004.

The ratings reflect the company's position as a leading, but small, participant in the fragmented medical device contract manufacturing business, well-diversified customer base, relatively stable revenues given high switching costs and a diversified product mix in three growing market segments (endoscopy, cardiovascular, orthopedics) with limited technology or obsolescence risk, the agency said.

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