S&P rates Hayes Lemmerz notes B+, cuts view to negative

Standard & Poor's said it revised its outlook on Hayes Lemmerz International Inc. to negative from stable, reflecting concerns about difficult industry conditions in the North American automotive market, including reduced vehicle production and continuing high raw material prices.

At the same time, S&P assigned a B+ rating to the new €120 million senior notes due 2012 of HLI Operating Co. Inc., a subsidiary of Hayes. The BB- corporate credit and senior secured rating on Hayes were affirmed, and a 3 recovery rating was assigned to Hayes' senior secured credit facility.

S&P said the ratings on Hayes reflect the company's below-average business profile and high financial risk. Although Hayes is the world's largest wheel manufacturer, its business profile is constrained by challenges of the cyclical automotive industry, the commodity-like nature of some of its products, increasing competitive threats from foreign manufacturers, high capital intensity, and vulnerability to volatile commodity prices.

More positively, Hayes has the broadest geographic and product scope in the industry and is the only supplier of steel and aluminum wheels in both North America and Europe, providing it with the unique ability to supply all of its largest customers' needs in their main markets.

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