S&P keeps Kinetek on developing watch, rates loans B, CCC+

Standard & Poor's said its ratings on Kinetek Inc. and related entities, including its B- corporate credit rating, remain on CreditWatch with developing implications, where they were placed on Sept. 13.

The agency said that this follows the announcement that private equity fund The Resolute Fund will acquire the company from current owner Jordan Industries Inc. (CCC+/negative).

If it is completed successfully, S&P said it expects to resolve the CreditWatch listing and to raise Kinetek's corporate credit rating to B from B-. The outlook would be stable.

At the same time, S&P said it assigned its B bank loan rating and a recovery rating of 2 to Kinetek's proposed $265 million first-lien credit facilities and its CCC+ bank loan and a recovery rating of 5 to the proposed $85 million second-lien term loan, based on preliminary terms and conditions.

S&P noted that the rating will continue to reflect Kinetek's highly leveraged financial profile following the proposed transaction and the competitive and cyclical nature of the global electrical motors and motion controls systems industry in which it operates, adding that partly mitigating these risks are the company well-established market positions in several niches and its relatively sound profitability underpinned by low-cost manufacturing capabilities.

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