S&P ups Stanadyne outlook to stable

Standard & Poor's said it revised its outlook on Stanadyne Corp. to stable from negative, reflecting modest debt reduction and prospects for more stable cash flow.

The ratings on the company, including the B corporate credit rating, were affirmed, the agency said.

The agency noted that it expects that Stanadyne's earnings and cash flow volatility will stabilize and margins will somewhat improve following the company's divestiture of its unprofitable Precision Engine Products Corp. business division in July 2006, with the net cash proceeds of about $20 million used to permanently reduce Stanadyne's second-lien term loan debt to about $44 million from $64 million.

Still, leverage will remain aggressive, with lease-adjusted total debt to EBITDA of about 5 times, the agency added, stating that the ratings reflect also Stanadyne's very high leverage, following a 2004 dividend distribution and disappointing 2005 EBITDA.

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