S&P: Rural/Metro on watch

Standard & Poor's said it placed on CreditWatch with negative implications the B+ corporate credit rating on Rural/Metro Corp., as well as all related issue-level ratings issued by its subsidiaries Rural/Metro Operating Co. LLC and Rural/Metro (Delaware) Inc.

The watch placement follows news that Rural/Metro agreed to be acquired by private-equity firm Warburg Pincus for $438 million.

The acquisition price does not include $261 million of debt on Rural/Metro's balance sheet, S&P said.

Warburg Pincus will most likely finance the equity purchase price with meaningful debt, weakening Rural/Metro's credit metrics below current levels, the agency said.

S&P said it expects Rural/Metro to maintain leverage below 5x to maintain its current ratings. But, a downgrade would be considered if leverage exceeds 5x and remains there on a sustained basis, the agency said.

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