S&P keeps Brake Bros. on watch

Standard & Poor's said Brake Bros. Finance plc's B long-term corporate credit rating remains on CreditWatch with negative implications, where it was placed on July 5 following the announcement of a takeover bid by Bain Capital LLC for about £1.4 billion.

The CCC+ ratings assigned to the company's €105 million 11½% subordinated bonds due 2011 and £105 million 12% subordinated bonds due 2011 were withdrawn following redemption of the notes on Sept. 12.

The agency said the CreditWatch placement continues to reflect its expectation that the group's debt could materially increase from the £700 million adjusted level posted at the end of 2006. The ratings could be lowered if Brake Bros' leverage increases following the debt refinancing that will result from the change in the shareholding structure.

The ratings continue to reflect Brake Bros' highly leveraged financial risk profile, S&P said, adding that this is partially mitigated by the company's No. 1 position in the growing U.K. food service distribution industry.

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