Moody's may lower Schefenacker

Moody's Investors Service said it placed all the ratings of Schefenacker AG on review for possible downgrade following the severe and sustained intensification of the competitive environment in the North America and European automotive industries and the company's interim results indicating continuing weakness in operating performance and cash flow generation.

This rating review was prompted by the company's below expected operating performance during the first six months of the year. Moody's said it is concerned by the negative effects that the difficult market conditions in the sector are having on Tier 1 suppliers, such as Schefenacker, where lower volumes from OEMs and higher raw material costs can result in material profit deterioration for the component manufacturer.

Ratings affected include the Ba3 rating on the €150 million senior secured facilities at Schefenacker AG; the B2 rating on the €200 million 9½% senior subordinated notes due 2014 issued by Schefenacker AG; the Ba3 senior implied rating on Schefenacker AG; and the B2 unsecured issuer rating on Schefenacker AG.

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