S&P lowers DBO

Standard & Poor's said it lowered the corporate credit rating on DBO Holdings, Inc. to B from B+, its $400 million asset-based revolving credit facility due 2011 was lowered to BB- from BB and $1.3 billion term loan to B from B+. The recovery ratings on the facilities remain unchanged at 1 and 3 respectively.

The outlook is stable.

"The ratings downgrade reflects our assessment that the company's operating results will continue to be materially lower than previously expected over the next few quarters. The poor operating performance is due to weak end market demand and margin compression, as the sharp decline in steel prices has resulted in the company selling older inventory at a loss," S&P analyst Sherwin Brandford said in a statement.

The rating incorporate the expectation that in fiscal 2009, EBITDA is likely to decline below $100 million, EBITDA coverage of interest to fall below 2x and leverage to increase above 10x mainly due to the ongoing U.S. recession and the impact this will continue to have on steel demand, the agency said.

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