S&P lowers Oxford Auto ratings

Standard & Poor's said it lowered its corporate credit rating on Oxford Automotive Inc. to CCC- from B- and lowered its rating on the company's second-lien senior secured debt to C from CCC. Ratings remain on CreditWatch negative where they were placed on Feb. 23.

The downgrade reflects S&P's ongoing concerns over Oxford's liquidity, which is very constrained while the company prepares for the December launch of the Mercedes M-class program at its new McCalla, Ala., facility.

Oxford generates virtually no EBITDA in North America, as most of the company's earnings are generated by its European operations. Oxford is not likely to be generating free cash flow, S&P said.

Downward revisions of EBITDA projections for 2004 and 2005 required adjustments to the financial covenants of Oxford's revolving credit facility.

S&P said the ratings on Oxford reflect the company's financial vulnerability over the next several months. The ratings would be lowered further if the company's liquidity were insufficient to successfully complete the McCalla launch activity without impairing creditors.

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