S&P rates RathGibson notes B-

Standard & Poor's said it assigned a B corporate credit rating to RathGibson Inc. and a B- rating to the company's proposed $200 million senior unsecured notes due 2014.

The outlook is stable.

Proceeds from the note offering - $2 million of rollover equity from management and $65.5 million of new equity from equity sponsor Castle Harlan Inc. - will be used to purchase the company from Liberty Partners. Total debt outstanding at the close of the proposed transaction will be $207.5 million.

S&P said the ratings reflect RathGibson's vulnerable business profile as a manufacturer of stainless steel and alloy-welded tubular products for cyclical niche markets, the company's highly leveraged capital structure and thin cash flow protection.

RathGibson has generated strong organic growth due to the shift from seamless tubing to welded tubing in North America, the agency said. With this shift largely completed, most of the company's future revenue growth is likely to come from international markets. The company's geographic diversity is currently limited, however, as about 83% of sales come from the United States.

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