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Fitch: Solectron on positive watch
Fitch Ratings said it placed Solectron Corp.'s BB- issuer default rating, BB- senior unsecured debt rating and B+ subordinated debt rating on Rating Watch positive after it agreed to be acquired by Flextronics International Ltd. (issuer default rating of BB+ on Rating Watch negative) for $3.6 billion in a combination of cash and stock. Fitch also said it affirmed Solectron's senior secured bank facility at BB, affecting about $600 million in debt securities.
Fitch said it believes that Solectron's senior unsecured and subordinated bondholders have an option to force redemption under a change of control provision, and it is likely that Solectron's debt would be retired at or soon after closing whereby Fitch would anticipate upgrading the various notes and issuer default ratings by one notch, then withdrawing the ratings.
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