S&P ups Kemet, rates loan B

S&P said it raised its corporate credit rating on Kemet Corp. to B from B-. The outlook is stable.

S&P also assigned a B issue-level rating and 3 recovery rating to the firm's new $345 million senior secured term loan B. The 3 recovery rating reflects an expectation of meaningful recovery (50%-70%; rounded estimate: 60%) in the event of payment default.

“Our upgrade of Kemet is based on our view that post-transaction, Kemet will be able to generate free cash flow of over $20 million annually, due to considerably lower interest expense and significant progress reducing operating expenses. Additionally, we expect the transaction will reduce pro forma leverage to about 3.8x as of March 31, 2017, down from over 5x in the year-ago period, and proceeds from the sale of NT's electromechanical devices division will grow Kemet’s cash balances to approximately $220 million,” S&P said in a news release.

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