S&P lowers ATU Auto-Teile

Standard & Poor's said it lowered the long-term corporate credit rating on ATU Auto-Teile Unger Handels GmbH & Co. KG to SD (selective default) from CCC-.

The agency also said it lowered the rating on ATU's €450 million senior secured notes to D (default) from CCC-.

The recovery rating on these notes is unchanged at 4, indicating 30% to 50% expected default recovery.

The downgrade reflects the company's failure to pay the coupon payment on its €450 million senior secured bond by the scheduled due date of Dec. 1, 2013. It also reflects an expectation that ATU will not pay the coupon within the 30-day applicable grace period.

S&P said it views this as a selective default.

The company recently said it is in advanced negotiations with investors and lenders regarding a financial and balance-sheet restructuring, the agency said.

A preliminary agreement has already been reached with one of its main lenders, private-equity investor Centerbridge, concerning a bond restructuring plan that envisages a partial debt-equity swap, S&P said.

The agency said it will examine the progress of ATU's restructuring over the coming weeks.

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