S&P cuts Heckler & Koch, notes to CCC

Standard & Poor's said it lowered its long-term corporate credit rating on Heckler & Koch GmbH to CCC from CCC+.

The outlook is negative.

The agency also lowered its issue rating on the company's senior secured notes to CCC from CCC+. The recovery rating on these notes remains unchanged at 4.

S&P said the action reflects its opinion that Heckler & Koch could face default within the next 12 months unless the company is able to fulfill its existing orders and successfully resume business in markets that it has been restricted from operating in since the change of government in Germany in 2013.

Although the German government recently indicated its willingness to approve exports of certain armaments, the delays in resolving the German export licensing policy to date have depressed Heckler & Koch's earnings and caused its liquidity position to deteriorate to "weak" from "less than adequate."

S&P believes that this liquidity issue will persist over the short-term until the benefits of any approved licenses begin to feed through, boosting cash flow.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.