S&P gives GSI loan B

Standard & Poor's said it affirmed its B corporate credit rating on GSI Group Inc. and revised its outlook to stable from negative.

At the same time, S&P said it assigned its bank loan rating of B and a recovery rating of 3 to GSI Holdings LLC's proposed $355 million first-lien credit facilities.

The agency noted that the proposed $120 million second-lien term loan is not rated, adding that the outlook revision to stable reflects its expectations that, despite significantly higher debt levels following its acquisition by Centerbridge, recent good operating performance and continuing favorable industry fundamentals for grain storage should result in positive free cash flow generation and gradual debt reduction.

According to S&P, the ratings continue to reflect GSI's highly leveraged financial profile, its exposure to cyclical and competitive niche agricultural equipment markets, and raw material cost volatility while this is partially offset by the company's leading positions in it market niche, the current cyclical upturn in demand for grain storage and equipment, as well as improved production efficiency.

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