NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed and removed the ratings of Seagate Technology Public Limited Company (Seagate) and its wholly owned subsidiaries from Rating Watch Negative following the company's announcement that it terminated discussions relating to a potential leveraged buyout (LBO) due to valuation issues. The Rating Outlook is Stable. Approximately $2.2 billion of total debt is affected by Fitch's action. A complete list of the ratings affirmed is at the end of this release.

Although Seagate concurrently initiated a plan to 'further optimize its capital structure to maximize shareholder returns', Fitch notes the amount of share repurchases, including repurchases that are debt-financed, is limited by a restricted payments covenant contained in the indenture of Seagate's 10% senior secured second-priority notes due April 14, 2014 ($430 million outstanding). In the absence of early repayment of the second-priority notes (callable prior to May 1, 2013 at the greater of 101% of par or applicable Treasury rate plus 50 basis points), Fitch believes the provision limits total cash payments for share repurchases and other restricted payments to a maximum of approximately $1 billion in the near term. Assuming $1 billion of debt-financed share repurchases, Fitch estimates total pro forma leverage (total debt/operating EBITDA) would increase to 1.2 times (x) from 0.8x as of Sept. 30, 2010. Fitch believes Seagate has sufficient incremental debt capacity at the 'BB+' rating to accommodate the new debt without adversely affecting the rating.

For additional information, refer to Fitch's full rating report on Seagate published on July 8, 2010.

Fitch affirms and removes the following ratings from Watch Negative and assigns a Stable Outlook:

Seagate

--Issuer Default Rating (IDR) at 'BB+'.

Seagate HDD Cayman

--IDR at 'BB+';

--Senior unsecured debt at 'BB+'.

Seagate Technology International (STI)

--IDR at 'BB+';

--Secured second lien notes at 'BBB-'.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 13, 2010);

--'Recovery Ratings and Notching Criteria for Nonfinancial Corporate Issuers' (Nov. 24, 2009);

--'Liquidity Considerations for Corporate Issuers' (June 12, 2007);

--Full Rating Report on 'Seagate Technology public limited company' (July 8, 2010).

Applicable Criteria and Related Research:

Recovery Ratings and Notching Criteria for Nonfinancial Corporate Issuers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=489006

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646

Liquidity Considerations for Corporate Issuers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=328666

Seagate Technology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=539102

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

CONTACT:

Fitch Ratings
Primary Analyst:
John M. Witt, CFA, +1-212-908-0673
Director
Fitch, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst:
Jason Pompeii, +1-312-368-3210
Senior Director
or
Media Relations, New York:
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com

KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:   Professional Services  Banking  Finance

MEDIA: