Moody's rates new Vishay convertible

Moody's Investors Service assigned a provisional B2 rating to Vishay Intertechnology Ltd.'s new $500 million convertible subordinated notes and a provisional Ba3 to its $400 million guaranteed senior secured revolving credit facility, citing steps to address its near-term liquidity issues and stabilization in operating performance.

At the same time, Moody's upgraded the company's $550 million of 0% convertibles due 2021 to B2 from B3 and raised the outlook to stable from negative.

Moody's confirmed the B2 rating on General Semiconductor's $172.5 million 5.75% convertible subordinated notes due 2006 but will withdraw the rating once Vishay has retired it with proceeds of the new issue.

The outlook reflects a belief that the restructuring of the bank facilities, together with the new convertible and the expected use of the proceeds to retire half of the 0% convertibless have alleviated concerns over potential near-term liquidity.

Importantly, the new credit facility will not have the minimum EBIT covenant (i.e. no two consecutive quarters of negative EBIT) that had previously raised the possibility that Vishay might not have access to its credit facility when it needed it to satisfy the put on the 0% convertible, Moody's said.

Constraining the ratings is the ongoing challenge the company faces in integrating its many acquisitions and generating organic growth.

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