Moody’s revises Optima Specialty to negative

Moody's Investors Service said it revised Optima Specialty Steel, Inc.'s outlook to negative from stable and affirmed its B2 corporate family rating, B2-PD probability of default rating and the B2 rating on its $175 million senior secured notes due 2016.

Moody’s said the outlook change reflects the company's diminished liquidity following the withdrawal of its proposed $300 million senior note offering, which would have funded the acquisition of Corey Steel Co., increased its liquidity, extended its debt maturities to 2019 from 2016 and modestly reduced its interest costs.

The agency is withdrawing the senior notes rating, which was assigned at B3 in October 2014.

Optima intends to issue $85 million in 12% senior unsecured notes due 2016 to fund the acquisition of Corey Steel and to retire the company's existing $35 million of 16% senior unsecured notes and to pay consent fees and call premiums on the notes. As a result, Optima will not extend its debt maturities and will incur incremental interest costs, Moody’s said.

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