S&P rates Symmetry B

Standard & Poor's said it assigned its B long-term corporate credit rating to Symmetry Holdings Inc.

The agency said it expects Symmetry to acquire Novamerican Steel Holdings Inc. for $494 million net of $91 million cash on hand, using $383 million of debt and $126 million in equity to fund the transaction.

The outlook is stable.

At the same time, S&P said it assigned its B- secured debt rating, with a recovery rating of 5, to Novamerican Steel Finco Inc.'s $315 million senior secured notes.

According to the agency, the ratings on Symmetry reflect the consolidated entity's high debt leverage, its relatively small position in the fragmented North American steel service center industry and its cyclical operating cash flow owing to the inherent instability of steel prices.

These weaknesses are offset somewhat by the company's variable cost structure, which mitigates its earnings volatility, good positions in some niche markets and its countercyclical working capital-related cash flows, the agency noted.

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