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S&P Rates Insilco's $150M Senior Subordinated Notes B+, Bank Loans BB

30 July 1997

S&P Rates Insilco's $150M Senior Subordinated Notes B+, Bank Loans BB

    NEW YORK, July 30 -- Standard & Poor's today has assigned its
single-'B'-plus rating to Insilco Corp.'s $150 million senior subordinated
notes, due 2007. Proceeds from the issue, being sold in accordance with
SEC rule 144A with registration rights, together with asset sale proceeds,
will be used to fund $220 million of common share repurchases.
    In addition, Standard & Poor's has assigned its double-'B' rating to the
firm's $200 million bank revolver, due 2003. A double-'B' corporate credit
rating also has been assigned to Insilco. The rating outlook is stable.
    The ratings for the Dublin, Ohio-based company reflect favorable positions
in a number of niche markets, tempered by a relatively weak financial profile.
    Insilco is a diversified company serving electrical/electronic,
automotive, and specialty publishing markets with eight stand-alone operating
units and a joint venture. Products include data transmission connectors,
power transformers, wire and cable assemblies, radiators, tubing, transmission
components, and school yearbooks. Businesses have limited-to-moderate cyclical
exposure and are subject to pricing pressures. However, product, market, and
customer diversity, along with positive secular industry trends, a competitive
cost base, and limited capital intensity, mitigate earnings and cash flow
volatility. Solid growth prospects are expected to be driven by new product
development, supplemented by niche acquisitions to expand core businesses.
    Financial risk reflects the firm's heavy debt burden, as evidenced by pro
forma total debt of $292 million, negative equity, and relatively thin cash
flow protection. Debt usage is expected to remain aggressive, reflecting the
potential for debt-financed acquisitions and future share repurchases. Total
debt to earnings before interest, taxes, depreciation, and amortization
(EBITDA) is expected to average between 3 times x-4x over time, an appropriate
range for the ratings.
    The bank facility, which is secured by substantially all of the company's
assets, is rated the same as the corporate credit rating. While this facility
derives strength from its secured position, it is not clear that a distressed
enterprise value would be sufficient to cover the entire loan facility.

    OUTLOOK: Stable.
    A favorable business environment and adequate financial flexibility,
afforded by a number of salable stand-alone units, limit downside ratings
risk. An aggressive financial policy restricts upside potential, Standard &
Poor's said. -- CreditWire

SOURCE  Standard & Poor's Credit Wire