S&P ups EnerSys

Standard & Poor's said it raised its corporate credit rating on EnerSys (formerly EnerSys Holdings Inc.) and its EnerSys Capital Inc. unit to BB from BB- and its senior secured bank loan rating on EnerSys Capital's $480 million senior secured first-lien credit facility to BB. S&P also affirmed its recovery rating of 4.

The outlook is stable.

S&P said the upgrade reflects expectations of a sustained improvement in the company's debt leverage following the completion of an initial public offering of 12.5 million shares of common stock at $12.50 per share, yielding net proceeds of roughly $140 million.

Proceeds will be used to prepay the principal on the company's $120 million senior second-lien term loan due 2012 and to prepay $17.9 million of its $380 million senior secured term loan B due 2011.

Pro forma total debt to EBITDA is about 3.0x compared to 4.6x at the end of the March 31 fiscal year. Over the intermediate term, S&P said it expects total debt to EBITDA to be 3.0x to 3.5x and EBITDA interest coverage to average 4.5x to 5.0x for the rating.

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