S&P ups Communication & Power loan to BB-

Standard & Poor's said it raised its senior secured bank loan rating on Communications & Power Industries Inc.'s $130 million secured credit facility to BB- from B+, raised the recovery rating to 1 from 2 and affirmed parent CPI Holdco Inc.'s B+ corporate credit and B- senior unsecured debt ratings.

The outlook is negative.

The ratings reflect a highly leveraged capital structure and modest scope of operations, offset somewhat by leading positions in niche markets, the agency said.

The company has proposed paying a $17 million dividend to its owners, financed with cash on hand and a $10 million increase to its existing term loan. The small dividend is expected to result in a minimal deterioration in already high leverage measures, the agency said, with pro forma debt to EBITDA for fiscal 2005 ended Sept. 30 increasing slightly to just over 5x.

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