S&P keeps Continental Alloys on developing watch

Standard & Poor's said its ratings on Continental Alloys & Services Inc., including the CCC corporate credit rating, remain on CreditWatch, where they were placed on June 18, with developing implications.

"We are keeping the ratings on CreditWatch to reflect our ongoing concern regarding Continental's ability to comply with the financial covenants governing its existing bank credit facility," explained S&P credit analyst Sherwin Branford in a news release.

Specifically, the company is required to maintain total debt to EBITDA at less than 3x for the life of the facility. However, as of Sept. 30, 2009, S&P estimates that leverage was well in excess of that level, resulting in the need for the company to negotiate a temporary waiver from its lending group while it negotiates amendments to the agreement, the agency said.

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