S&P assigns Palm B, loan B+

Standard & Poor's said it assigned its B corporate credit rating to Palm Inc.

The outlook is stable.

The agency said that the action follows a planned recapitalization, including a term loan, a preferred equity investment by private equity firm Elevation Partners and a cash dividend to common shareholders.

At the same time, S&P said it assigned a B+ bank loan rating and 2 recovery rating to Palm Inc.'s proposed $40 million revolving credit agreement maturing in 2012 and a B+ bank loan rating and 2 recovery rating to the proposed $400 million term loan maturing in 2013.

The agency said that the B corporate credit rating reflects the company's high debt leverage and limited product range, substantial customer concentration and significant price pressures, resulting in modest operating margins.

These factors are partly offset by Palm's good position in its key addressable markets and good historical track record in product innovation and its good liquidity, S&P noted.

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