ACS credit ratings raised after Xerox acquisition

(AP) — The credit ratings of Affiliated Computer Services Inc. were raised to investment grade from junk Tuesday following the company's acquisition by Xerox Corp.

Fitch Ratings raised its issuer default rating for ACS to "BBB" from "BB" and two tranches of senior notes worth $500 million to "BBB" from "BB-."

Fitch said ACS' other debt — a senior secured revolving credit line and senior secured term loan — were repaid in full after Xerox closed its acquisition of ACS. As such, Fitch is withdrawing its ratings on those debt.

The rating outlook for ACS is "Negative," the same as the one for Xerox.

Xerox's purchase of ACS, a company that provides outsourcing services to businesses such as human resources management, closed on Monday. The printer and copier maker paid about $6 billion in cash and stock.

While Xerox is not the guarantor of ACS' notes, Fitch said it still upgraded the debt because a cross-default provision in Xerox's credit agreement stipulates that if ACS defaults then Xerox will be deemed to have done so as well.

The agreement covers any unit in which Xerox owns more than an 80 percent stake on debt that exceeds $100 million.

ACS merged into Xerox's Boulder Acquisition Corp. unit. Boulder has now assumed ACS' remaining debt of $250 million in senior notes due 2010 with an interest rate of 4.7 percent and $250 million senior notes due 2015 with a coupon of 5.2 percent.