S&P keeps Aearo on negative watch

Standard & Poor's said Aearo Corp.'s B+ corporate credit rating, B+ secured debt rating and B- subordinated debt rating remain on CreditWatch with negative implications, where they were placed Feb. 2.

The CreditWatch listing will be resolved once Aearo's acquisition by private equity sponsor Permira Funds from Bear Stearns Merchant Banking for $765 million is completed, the agency said. Aearo will have about $510 million of debt outstanding and debt to EBITDA of 6x at the close of the transaction.

S&P proposed a B rating for parent company Aearo Technologies Inc., to be rated upon completion of the transaction. The ratings on Aearo Corp. would then be withdrawn, as these issues will be redeemed with the proceeds from new financing expected at the end of March.

Following the acquisition, the proposed new rating on Aearo Technologies will reflect the higher-than-expected leverage it will take on during the transaction, the agency said.

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