S&P drops GenCorp

Standard & Poor's said it lowered its ratings on GenCorp Inc., including lowering the corporate credit rating to CCC+ from B+.

The outlook is developing.

"The downgrade reflects significant uncertainty about GenCorp's ability to pay off or refinance $125 million of convertible notes if put to the company in January 2010," said S&P credit analyst Christopher DeNicolo.

As of Feb. 28, the firm had $80 million of cash and an undrawn $80 million revolving credit facility, S&P said. However, the revolver cannot be used to repay the notes and the credit facility will have to be amended, likely resulting in much higher interest costs.

"In addition," added DeNicolo, "the current trading price of the notes-around 70 cents on the dollar as of the date of this report-increases the likelihood that the company could enter into a distressed exchange to address the refinancing."

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