S&P: Ionics on watch positive

Standard & Poor's said it placed its BB- corporate credit rating and first-priority senior secured bank loan on Ionics Inc. on Credit Watch positive following the announcement by General Electric Co. (AAA/stable/A-1+) that it will acquire Ionics for $1.1 billion in cash plus assumption of existing debt.

S&P said the combination with GE's existing water franchise business broadens GE's position in the technology-focused segment of water treatment and provides an entry into the fast-growing desalination segment where GE had no presence.

The ratings on Ionics Inc. reflect the company's high debt load, weak cash flow generation, a challenging U.S. power-generation market and greater-than-anticipated risks involved in joint venture projects outside the United States, according to S&P.

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