S&P cuts MetoKote outlook to negative

Standard & Poor's said it revised MetoKote Corp.'s outlook to negative from stable and affirmed the company's B+ corporate credit rating and B+ first-lien senior secured bank loan with a recovery rating of 3.

The outlook revision reflects S&P's concerns about MetoKote's ability to maintain credit protection measures consistent with the rating, given the company's high leverage and current fundamental automotive industry challenges that have the potential to pressure EBITDA. The automotive original equipment manufacturer market, which accounts for 51% of MetoKote's revenues, has significantly deteriorated in the past year in the face of pricing pressures, weak volumes and high material costs. In addition, the financial performance of the auto supplier group is vulnerable to the increasingly fragile financial health of some of its major customers.

MetoKote's relatively weak fiscal 2005 EBITDA left the company more highly leveraged than expected following a debt-financed share repurchase early in the year. Lease-adjusted total debt to EBITDA is about 4.8x.

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