S&P: Easton-Bell Sports view positive

Standard & Poor's said it revised the outlook on Easton-Bell Sports Inc. to positive from developing and affirmed its B- corporate credit rating.

The agency also assigned a B- rating to Easton-Bell's proposed $325 million seven-year senior secured notes with 4 recovery rating.

"The outlook revision to positive from developing reflects the resolution of financial covenant compliance concerns and an improvement in near-term liquidity based on the proposed recapitalization and the potential for credit measure improvement if cost savings initiatives lead to profit growth," S&P analyst Jerry Phelan said in a statement.

Ratings reflect the group's aggressive financial policy and high leverage, participation in the highly competitive sporting goods industry, expectations for continued weak consumer and institutional spending, modest forecast free cash flow generation, and limited geographic diversity, the agency said.

The company benefits from its solid market share in some sports equipment product categories, the agency noted.

S&P said it could raise the rating if the company maintains adequate liquidity, profitability rebounds on cost savings initiatives and/or demand growth and leverage falls to less than 7.5x.

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