S&P puts Riddel Bell on negative watch

Standard & Poor's said it placed Riddell Bell Holdings Inc.'s ratings, including the B+ corporate credit rating, on CreditWatch with negative implications following the company's announcement that it will combine its operations with Easton Sports Inc. to form a new entity called Easton-Bell Sports Inc.

The transaction, expected to close during the first quarter of fiscal 2006, is valued at about $400 million and will be financed with a combination of equity and debt. Teachers' Private Capital, York Street Capital Partners and Jim Easton will invest additional equity into the company. Fenway Partners will maintain a majority ownership in the company.

The combined entity will also use a new $415 million senior secured bank facility to refinance a portion of Riddell Bell's existing debt and fund a portion of the merger. Easton-Bell Sports will generate more than $600 million in annual revenue and hold leading market positions in baseball, softball, football, hockey, cycling, auto racing and snow and motorcycle sports equipment, the agency said.

However, S&P said it is concerned that the additional debt incurred from this transaction may further weaken credit measures.

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