Moody's Investors Service has upgraded Stryker Corporation's $1.65 billion senior secured credit facility. The shift from a Ba1 rating to an investment grade Baa3, is a result of positive operating trends, the successful completion of the Howmedica integration and further confidence in the management's commitment to achieve and maintain an investment-grade profile. The Kalamazoo, Mich.-based company is a manufacturer of specialty surgical and medical products. Since the Howmedica acquisition in 1998, total debt has been reduced by approximately $412 million to $1.09 billion. Leverage as measured by debt/EBITDA ratio has decreased to 1.8x from 3.5x in 1998. Moody's anticipates that Stryker will continue to focus on improvements, though there are concerns that the company will make acquisitions that may impact debt reduction measures.
* Cambridge, Mass.-based Polaroid's senior unsecured debt rating has dropped to Caa1 from B2. The downgrade reflects continued poor performance, an absence of investment or definitive partnership arrangements for the introduction of new printing media and the refinancing risk of approximately $500 million of debt maturing by January 2002. This follows a downgrade in April from Ba2 to B2, with Moody's citing the decline of the company's traditional core business and the inability of new product contributions to offset the weakness in the old (LMW, 4/9). In response to cost imbalances the company implemented an $80 million restructuring program in February and announced a $150 million cost-cutting exercise this month. Moody's does recognize the restructuring program and the company's large installed base of users, but the rating is still on review for further downgrade. The company is looking to refinance bank and bond debt with a credit via J.P. Morgan (see story, page 1).
* K & F Industries $172 million senior secured credit has been upgraded to Ba2 from Ba3, reflecting strong operating performance, substantial debt reduction and improved balance sheet and debt protection measurements. The New York City manufacturer of aircraft brakes and wheels has reduced overall debt by $193 million to $337 million since a 1997 recapitalization. The rating also reflects the company's position as a leading supplier of anti-skid systems, brakes and aircraft wheels and aircraft fuel tanks for commercial and military aircraft. K & F had record performance in 2000 as sales increased almost 6% to $376 million and EBITDA 10% to $131 million due to growth in both the commercial and military sectors. But the company is still leveraged, the aircraft environment is competitive and K & F is relatively small in terms of asset base and revenue.