S&P: Armkel on positive watch

Standard & Poor's said it placed the ratings on Armkel LLC on CreditWatch with positive implications. This follows the announcement that Church & Dwight Co. Inc. (BB/stable/--) will purchase the remaining 50% interest in the company that it does not already own from Kelso & Co. for $254 million.

The ratings on Church & Dwight are affirmed.

Ratings on positive watch include Armkel's BB- corporate credit rating, BB- senior secured bank loan rating, and B subordinated debt rating. Ratings affirmed include Church & Dwight's BB corporate credit rating, BB senior secured bank loan rating, and B+ senior unsecured debt rating.

S&P said it believes that upon completion of the planned transaction, Armkel's ratings will be raised to be in line with Church & Dwight's. In the near term, S&P expects that this transaction will increase leverage for the combined entity.

However, Church & Dwight has been operating the Armkel joint venture since acquiring a 50% interest in 2001. As a result, integration risk is expected to be minimal after closing. Moreover, the improved business profile of the consolidated entity should largely offset the increase in debt. Furthermore, the operating stability and cash-generating ability of the combined company should help reduce debt leverage in the intermediate term.

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