Hey bobcat, what do you think about this
S&P Revises Anacomp's Outlook to Positive; Senior Notes Rated B-
NEW YORK, June 8 /PRNewswire/ -- Standard & Poor's today assigned its single-'B'-minus rating to Anacomp Inc.'s $140 million senior subordinated notes due 2004 and revised its ratings outlook on the company to positive from stable.
Standard & Poor's corporate credit rating on Anacomp is single-'B'-plus. The rating reflects Anacomp's solid industry position in a declining technology base, offset by good cash flow characteristics, and adequate financial flexibility.
The outlook revision reflects Anacomp's improved market share with the agreement to acquire the First Image business from First Data Corp., and potential for enhanced debt protection measures.
Indianapolis, Indiana based Anacomp is a leader in the market for transforming computer output to microforms. The company sells micrographic equipment and supplies, and operates data service centers. Micrographic revenues are expected to continue to decline at low single-digit levels as users migrate to other storage solutions where appropriate and cost-effective. However, Anacomp's data service market share is significantly enhanced by the First Image acquisition.
Despite declining equipment sales, recurring service and supplies revenues represent almost half of total revenues. Operating margins (before depreciation, amortization and special charges) are expected to remain at about 21%. Interest coverage from earnings before interest, taxes, depreciation, amortization and special charges should remain in excess of 3 times (x), with additional potential for cost savings from consolidated facilities.
Free cash flow from operations should accommodate small acquisitions and a moderate debt maturity schedule. The proposed issue will be used to finance the acquisition of First Image. Adequate financial flexibility is provided by a $80 million secured revolving credit facility.
OUTLOOK: POSITIVE
If Anacomp demonstrates the ability to generate sustained, internal growth, ratings could be adjusted upward, Standard & Poor's said. -- CreditWire |
