S&P affirms Esterline

Standard & Poor's said it affirmed the BB issue-level rating on Esterline Technologies Corp.'s unsecured debt and removed the rating from CreditWatch, where it was placed with negative implications in May.

The unsecured recovery rating remains at 5.

Esterline announced that it completed the acquisition of Souriau Group for $705 million, S&P said.

The acquisition was financed with cash on hand, drawings on the company's existing $460 million secured revolving credit facility and a new €125 million secured term loan, the agency said.

Although the amount of secured debt increased, S&P said it believes the recovery prospects for the unsecured debtholders remains within the 10% to 30% range, appropriate for a 5 recovery rating.

The ratings were affirmed because an acquisition of this size was considered in the company's ratings previously, the agency said.

The company has stated that it is committed to using excess cash flow to reduce debt, so S&P said it expects that credit protection measures will likely improve fairly quickly with a debt-to-EBIDTA ratio of less than 2.5x, S&P said.

The ratings also reflect the company's exposure to the competitive and cyclical commercial aerospace market, its active acquisition program and modest size compared with some competitors, the agency added.

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