S&P cuts Mitchell to B

Standard & Poor's said it lowered its corporate credit rating on Mitchell International Inc. to B from B+ and affirmed its B+ rating with a recovery rating of 3 on Mitchell's existing $145 million senior secured bank facility, which consists of a $10 million revolving credit facility due 2009 and a $135 million term loan due 2011. The ratings were removed from the negative CreditWatch.

The lowering of the corporate credit rating reflects the agency's expectation for a substantial increase in operating lease-adjusted total debt-to-EBITDA following the acquisition of Mitchell by an investment group led by Aurora Capital Group.

The affirmation reflects the fact that Mitchell's existing creditors do not bear the additional risk inherent in the new capital structure, as existing debt will be refinanced as part of the transaction, the agency said. Upon the closing of this transaction, all ratings on Mitchell will be withdrawn, as there will be no publicly rated debt outstanding.

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