Fitch affirms Anixter ratings

Fitch Ratings said it has affirmed Anixter Inc.'s BBB- senior unsecured debt rating following the company's announcement of its intention to issue a one-time cash dividend of $1.50 per share on March 31 for a total of $55 million. Fitch has also affirmed Anixter International's BB+ rating.

The outlook is stable.

Fitch said that while the issuance of a dividend may potentially have negative credit implications, Fitch believes Anixter has flexibility within its current rating category to absorb any negative short-term effects this may have on liquidity. In addition, this particular dividend is consistent with Anixter's expected use of proceeds from its issuance of zero-coupon convertible senior notes in June 2003.

At the time, Anixter expected to use the proceeds of the offering to repurchase outstanding debt and to a lesser extent equity securities, as well as for general corporate purposes.

To date, the company has used proceeds from the offering to repurchase a portion of its outstanding 7% zero-coupon bonds due 2020 as well as to repurchase common shares. Remaining proceeds total about $55 million and will be used to pay the one-time dividend.

Fitch said the ratings and stable outlook continue to reflect Anixter's strong market position, solid liquidity position, manageable near-term debt obligations and modest capital spending requirements. In addition, Fitch recognizes the company's industry-leading margins and stabilizing revenue stream. Credit concerns continue to include the competitive pricing environment within the company's markets and the continued sluggishness in telecom spending. In addition, the shift to maintenance-based from capital-based spending continues.

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