S&P puts Seagate on watch

Standard & Poor's said it placed all its ratings on Seagate Technology and its subsidiaries, including the BB+ corporate credit rating, on CreditWatch with negative implications.

In the agency's opinion, Seagate's announcement that it is considering the indication of interest for a going-private transaction, and that the board is considering it as well as other strategic alternatives, increases the likelihood that some recapitalization event could occur.

Given the early stage of the evaluation process, there is a wide range of outcomes with respect to a downgrade of the company, S&P said. For example, a going-private transaction could result in a downgrade of the corporate credit rating to B.

Ratings would remain unchanged if the company's current capitalization does not change, the agency said, adding that there is some capacity within the current rating for a modest increase in leverage should the company pursue a leveraging transaction to enhance shareholder value.

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