S&P affirms Charles River, rates loans BBB-

Standard & Poor's said it affirmed its BBB- corporate credit and other ratings on Charles River Laboratories International Inc. and removed the ratings from CreditWatch, where they were placed with negative implications on April 26 when the company announced it would acquire WuXi PharmaTech (Caymen) Inc. for $1.6 billion in cash and stock.

The agency also assigned a BBB- senior secured debt rating to Charles River's proposed $1.2 billion senior secured credit facility, consisting of a $250 million revolver due 2015, a $780 million term loan A due 2015, and a $170 million euro-equivalent term loan A due 2015 being issued by Charles River Nederland BV.

The outlook is negative.

The agency said the acquisition adds a third business segment, discovery chemistry services, to Charles River and expands the company's presence in the growing China market for pharma research services. At the same time, S&P said leverage does jump to roughly 3.4 times, high for an intermediate financial risk profile.

The ratings on Charles River continue to reflect the company's leading positions in the research animal model and preclinical trial services markets, S&P's belief in the solid long-term demand for the company's products and services and management's demonstrated willingness to operate with moderate leverage, the agency said.

The company's relatively narrow focus and the current uncertainty in pharma research and development spending patterns - especially in the preclinical space, where Charles River mainly operates - temper those strengths, in S&P's view.

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