S&P: Dresser-Rand unaffected

Standard & Poor's said Dresser-Rand Co.'s (B+/stable/--) use of the majority of the proceeds of an IPO to pay a dividend to existing shareholders does not affect the rating or outlook on the company.

Previously a unit of Ingersoll-Rand Co., Dresser-Rand was bought by First Reserve Corp., a private equity firm, in a leveraged buyout transaction in October 2004. Since the buyout, Dresser-Rand has generated considerable cash flow and repaid debt aggressively, improving financial leverage to more manageable, though still high, levels.

S&P said that although the transfer of IPO funds to existing shareholders reduces Dresser-Rand's financial flexibility and detracts from its credit quality, the company's improved capital structure is able to absorb the transaction without resulting in lower ratings.

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