S&P cuts Teksid ratings

Standard & Poor's said it lowered its long-term corporate credit rating on TK Aluminum Ltd. to B from B+ owing to weaker-than-expected production volumes in 2003 and 2004.

In addition, the rating on the guaranteed €240 million senior unsecured notes that TK Aluminum issued through its financing unit, Teksid Aluminum Luxembourg S.a.r.l., SCA, was lowered to CCC+ from B-, reflecting solely their subordination to all existing and future priority debt.

All ratings were removed from CreditWatch, where they were placed on Dec. 19, 2003. The outlook is stable.

"Standard & Poor's considers TK Aluminum's business environment to be weaker, following lower-than-expected improvements in production volumes in 2003, lower-than-expected production volumes and higher pricing pressures in 2004, and currently unfavorable foreign exchange exposure," said S&P credit analyst Martin Amann. "This is likely to affect TK Aluminum's financial performance in 2004, so that credit protection measures are commensurate with a B rating."

The rating also reflects the operating challenges the company must overcome to increase its capacity utilization and improve operating efficiencies, as well as increase production volumes, the agency said.

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