S&P cuts Keystone Automotive

Standard & Poor's said it lowered Keystone Automotive Operations Inc.'s corporate credit rating to CCC from B-, along with the rating on its $200 million senior secured term loan due 2012 to CCC from B- and the rating on the $175 million senior subordinated notes due 2013 to CC from CCC. The recovery rating on the senior secured term loan is 4, indicating that lenders could expect 30% to 50% recovery in the event of a default. The recovery rating on the senior subordinated notes is 6, indicating a 0% to 10% recovery in the event of a default. The agency said it does not rate the company's $125 million asset-based revolving credit facility due 2012.

All of the ratings were removed from CreditWatch, where they were placed in March with negative implications.

The outlook is negative.

The ratings reflect continued poor industry demand, weak credit measures, limited financial flexibility and an imbalanced capital structure that will make it difficult to avoid some form of restructuring, S&P said.

Positively, Keystone holds the No. 1 market share in the fragmented wholesale specialty automotive parts distribution industry, the agency said.

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