S&P rates Mitchell loan

Standard & Poor's said it assigned its B+ corporate credit rating to Mitchell International Inc. At the same time, S&P assigned its B+ senior secured debt rating with a recovery rating of 3 to Mitchell's proposed $110 million first-priority senior-secured bank facility, which will consist of a $15 million revolver due 2009 and a $95 million term loan due 2011. S&P also assigned its B- senior secured debt rating with a recovery rating of 5 to Mitchell's proposed $45 million second-priority senior-secured term loan due 2012.

The proceeds from these facilities will be used to refinance Mitchell's existing debt as well as to pay a dividend to shareholders and management. The outlook is stable.

S&P said the ratings reflect Mitchell's narrow product focus within a niche marketplace, customer concentrations, and high leverage. These are only partially offset by a largely recurring revenue base supported by intermediate term customer contracts, high barriers to entry and solid operating margins, allowing for modest free operating cash flow generation.

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