S&P downgrades Metaldyne

Standard & Poor's said it lowered its corporate credit rating on Metaldyne Corp. to CC from CCC+ and lowered the ratings on the company's senior secured and subordinated debt.

The outlook is negative.

The agency said the downgrade reflects the company's announcement that it is making a tender offer for all of its outstanding bonds at a steep discount to face value. S&P considers the offer to be a distressed exchange and, as such, tantamount to a default.

The company said it is also seeking consent for a prepackaged plan of reorganization should the tender offer not be completed and has reached agreement with its lenders to ease covenants and provide additional collateral. Parent company Asahi Tec Corp. will provide $50 million of capital to fund the tender offer, and Metaldyne customers Chrysler LLC, Ford Motor Co. and General Motors Corp. have agreed to provide $60 million of secured financing in conjunction with the tender offer.

S&P said it will lower the corporate credit rating to SD and the exchanged bond ratings to D if the tender offer is completed.

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