Fitch Expects to Rate Cooper US, Inc.'s Planned $300MM Debt Issuance 'A'

Business Wire,  March 24, 2008  

Tags: Cooper, Fitch

• E-mail
• Print
• Link

CHICAGO -- Fitch Ratings expects to assign a rating of 'A' to the planned $300 million of new seven-year fixed rate senior unsecured notes to be issued by Cooper US, Inc. The notes will be guaranteed by Cooper Industries, Ltd. (CBE), the ultimate parent of Cooper US, Inc. and by the principal U.S. electrical subsidiaries of Cooper US, Inc. Proceeds are expected to be used to reduce the amount of commercial paper outstanding. The Rating Outlook is Stable.

The ratings are supported by CBE's established product lines, strong market positions, solid free cash flow and increased geographic diversification. CBE's revenue and EBITDA margins continued to improve in 2007 due to strong demand in the utility and industrial markets, an increased presence in developing markets and successful new product introductions. The positive impact on revenue from previous acquisitions and internal growth could be subject to uncertainty due to U.S. economic conditions in the current year. Other rating concerns focus on asbestos liabilities and increased discretionary spending. CBE's asbestos liabilities have not yet been resolved, but the company's liquidity and solid operating performance should support its ability to fund a final settlement. With respect to discretionary spending, acquisitions and share repurchases can reasonably be expected to continue at a similar rate as occurred in 2007. The associated negative impact on leverage is expected to be mitigated by CBE's strong generation of free cash flow and improving margins.

As of Dec. 31, 2007, CBE's liquidity included $327 million of cash and investments and a $500 million committed bank facility that matures in November 2009, offset by $356 million of commercial paper outstanding, current maturities and short-term debt. Upon issuance of CBE's new notes, a majority of debt will be structured as long-term.

Fitch currently rates CBE as follows:

Cooper Industries, Ltd.

--Issuer Default Rating (IDR) 'A';

--Senior unsecured bank credit facilities 'A'.

Cooper US, Inc.

--Issuer Default Rating (IDR) 'A';

--Senior unsecured bank credit facilities 'A';

--Senior unsecured debt 'A';

--Short-term IDR 'F1';

--Commercial paper 'F1'.

Cooper Industries LLC

--Issuer Default Rating (IDR) 'A';

--Senior unsecured debt 'A'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

COPYRIGHT 2008 Business Wire
COPYRIGHT 2008 Gale, Cengage Learning