Moody's ups Ray, Rexel outlook to positive

Moody's Investors Service said it changed to positive from stable the outlook on Ray Acquisition SCA's B2 corporate family rating and Caa1 €600 million 9 3/8% senior subordinated notes due 2015 and subsidiary Rexel SA's B2 €1.502 billion senior secured credit facilities.

Moody's said the change in outlook is prompted by Rexel's strong operating performance since its ratings were assigned on March 8, 2005. At initial issuance, Rexel's pro forma lease-adjusted leverage was 7.8x, which was considered extremely high and a major determinant for Rexel's B2 corporate family rating. As of the first nine months of 2005, Rexel's adjusted leverage had fallen to about 6.8x.

Moody's attributed the fall in leverage to the combination of stronger profitability and some reduction in debt. Rexel's revenue growth was very strong during 2005, with preliminary fiscal year 2005 sales of €7.377 billion up 8.4%. In addition, EBITDA margins continued to improve during the first nine months of the year, from 5.1% in fiscal year 2004 to 5.5% by Sept. 30.

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