S&P puts Duratek on negative watch

Standard & Poor's said it placed Duratek Inc.'s BB- corporate credit rating and BB- $145 million senior credit facilities on CreditWatch with negative implications following the company's announcement that it has executed a definitive merger agreement to be acquired by EnergySolutions LLC.

Based on preliminary plans, EnergySolutions will acquire all outstanding shares for $396 million, which includes the assumption of Duratek's outstanding debt. The details of the acquisition financing have not been announced, but S&P predicted they will include a combination of debt, cash held by EnergySolutions and equity provided by the owners of EnergySolutions.

S&P said the CreditWatch listing indicates that the ratings could be lowered modestly or affirmed depending on the amount of debt in the financing plan and other factors, including a review of the business profile of the combined company, operating prospects for the next several years and the financial policy of EnergySolutions following the transaction.

The ratings on Duratek reflect its modest scale and limited diversity, compounded by the operational risks associated with contract bidding in a low-growth industry, the agency said.

S&P said these factors are partially offset by the strength of the company's competitive position, limited competition in primary service areas and technological expertise in the radioactive waste treatment market.

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