S&P cuts Heckler & Koch

Standard & Poor's said it lowered its long-term corporate credit rating on Heckler & Koch GmbH to CCC+ from B-, along with its €120 million of 9¼% senior secured notes to CCC+ from B-, in line with the corporate credit rating.

The recovery rating on the senior secured notes is unchanged at 4, indicating 30% to 50% expected recovery in a default.

The outlook is negative.

The downgrade reflects the company's inability to meaningfully address the refinancing of its €120 million 9¼% senior secured notes, which mature in July 2011, S&P said.

The situation is further exacerbated by the payment-in-kind notes of a nominal value of €100 million, issued by the company's indirect parent, Heckler and Koch Beteiligungs GmbH, the agency said.

S&P said it believes that the company's strategy to address this situation will be to establish a facility on which the group can draw when its senior secured notes mature.

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