S&P cuts Wise Metals view to negative

Standard & Poor's said it revised its outlook on Wise Metals Group LLC to negative from stable and affirmed its B corporate credit rating and its B- rating on the company's $150 million senior secured notes due 2012.

S&P said the outlook revision reflects S&P's concerns about the company's higher-than-expected debt levels, limited liquidity, and weak credit metrics, which are related to meaningful increases in working capital levels. Indeed, liquidity was a meager $10 million of availability under its $125 million revolving credit facility as of May 17.

The ratings on Wise Metals Group reflect the company's limited operating diversity, risk of customer concentration, very weak margins, risk of margin squeezes, thin liquidity levels, and a very aggressive capital structure, S&P said. These factors more than offset the recession-resistant end-use demand of its products, currently favorable market conditions, and some margin over metal protection provided through contractual arrangements.

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