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Moody's Reviews Airgas For Possible Upgrade

The Associated Press

NEW YORK (AP) — Moody's Investors Service on Wednesday said it was reviewing its non-investment grade credit rating of Airgas Inc. for a possible upgrade, citing the industrial gas supplier's recent financial results amid a string of costly acquisitions.

Moody's said it expects to complete by the end of July a review on whether to increase its corporate family rating of Airgas from the current "Ba1," and from a "Ba2" rating for the Radnor, Pa.-based company's senior subordinated notes. A "Ba1" rating is Moody's highest non-investment grade or "junk" rating, while "Ba2" is one notch lower.

Moody's said it "recognizes that over the past three years key credit metrics have strengthened to investment grade levels, despite spending more on acquisitions each year than its generates in free cash flow."

On May 5, Airgas reported its fiscal fourth-quarter profit fell 12 percent as customers were hurt by the recession. The company said it earned $56.5 million, or 68 cents per share, for the quarter ended March 31, down from $64.2 million, or 76 cents per share, during the year-earlier period. Sales fell 8.7 percent to $992.1 million from $1.09 billion a year earlier.

In announcing its review, Moody's cited "another quarter of relatively strong results" that Moody's said "reflects our expectation that Airgas will continue to perform well despite the very weak macro-economic environment in North America."

The company said its review "will evaluate Airgas' ability to maintain metrics at investment-grade levels despite ongoing acquisition activity," as well as management's plan to refinance debt.

Shares of Airgas dipped 49 cents to $42.06 in afternoon trading. The stock has traded in a 52-week range of $26.29 to $65.45.