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S&P cuts Metaldyne loan to B, debt to CCC+
Standard & Poor's said it lowered its corporate credit and its other ratings on Metaldyne Corp. and removed them from CreditWatch, where they were placed Nov. 29.
S&P lowered Metaldyne's corporate credit rating to B from BB-, senior secured bank loan rating to B from BB-, senior unsecured debt rating to CCC+ from B and subordinated debt rating to CCC+ from B.
S&P said the rating actions are based on the company's high leverage, constrained liquidity and the increasingly challenging industry conditions. The outlook is negative.
While S&P said it still expects that the company will be able to significantly offset higher raw material costs and maintain viable liquidity in the face of challenging industry conditions during 2005, partly due to a fairly well-positioned customer mix, leverage is likely to remain high, as most cash flow will be used for debt service, capital spending and to support working capital needs.
For the rating, S&P said it expects lease-adjusted debt to EBITDA to be 5x to 6x. For the 12 months ended Sept. 30, the company's leverage, as calculated under its bank agreement, was 4.47x.
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