Fitch rates Anixter convertible BB-

Fitch Ratings said it assigned a BB- rating to Anixter International Inc.'s offering of up to $300 million senior unsecured convertible notes due 2013.

The agency said it expects Anixter to use the proceeds from this offering to reduce debt by about $150 million and to repurchase common stock with the remaining portion. Combined with a repurchase program begun at the beginning of January, Anixter will have repurchased close to 3 million shares, or 8% of the total share outstanding, this year.

The outlook is stable, but Fitch warned that any similar debt-financed shareholder friendly actions in the future that result in deteriorating credit protection measures will result in negative rating actions.

Anixter's BB+ issuer default rating reflects its improved operating performance, which the agency attributed to a stable end-market demand environment, market share gains in the company's small but growing sales of fasteners and C-class components to original equipment manufacturers and higher EBIT margins, due in part to cost savings from integrating recent acquisitions and to rising copper prices during 2006.

Rating concerns center on the company's history of using debt financing for shareholder-friendly actions and Fitch's expectation that Anixter will continue using free cash flow for a combination of special dividends and acquisitions.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.