S&P rates MetoKote loans BB-

Standard & Poor's said it assigned a B+ long-term corporate credit rating to MetoKote Corp. and a BB- rating with a recovery rating of 2 to its first-priority bank facilities.

The outlook is negative.

The agency said the ratings reflect the company's highly leveraged financial position and weak business risk profile as a participant in the highly competitive and cyclical coating business.

Certain business characteristics somewhat alleviate these factors, including MetoKote's contract structure with many customers and the ability to design, build, install and operate a complete range of coating systems, S&P said, adding that MetoKote has exposure to a number of non-auto-related markets such as agriculture, truck and bus, and construction.

The negative outlook reflects the agency's concern that MetoKote's recent improvement in free cash flow and leverage may not be sustainable, given auto industry challenges and the company's difficulty in expanding its revenues and EBITDA.

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