Moody's boosts ON Semiconductor

Moody's Investors Service said it upgraded the corporate family and senior secured debt ratings of ON Semiconductor Inc. to B2 from B3. The outlook is positive.

Moody's said the upgrade reflects recent improvements to the company's capital structure, which lowers debt and interest expense, eliminates preferred dividend payments and increases shareholders' equity while maintaining financial flexibility and liquidity.

It also considers good internal execution on cost reduction, manufacturing improvements and inventory management that have resulted in margin expansion, lower capital expenditure requirements and consistently higher levels of positive free cash flow compared to prior year periods, the agency added.

Affected ratings include the company's $25 million guaranteed senior secured revolving credit facility due 2008 to B2 from B3 and $640.7 million guaranteed senior secured term loan G maturing through 2009 to B2 from B3.

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