S&P puts Capital Automotive on positive watch

Standard & Poor's said it placed the B+ ratings with 3 recovery ratings on Capital Automotive LLC's first-lien term loan due 2017 and revolving credit facility due 2016 on CreditWatch with positive implications.

The agency also said it affirmed its B+ corporate credit rating and stable outlook.

The CreditWatch placement and affirmation follows news that the company is seeking an amendment to its first-lien term loan, which would extend the maturity to 2019 from 2017, reduce the interest rate and modify certain financial covenants, said Scott Sprinzen, an S&P analyst.

The maturity also would be extended on the company's $200 million revolving credit facility to 2018 from 2016.

The company also stated that it is considering either issuing $300 million to $325 million of second-lien notes due 2018 or raising equity. The proceeds will be used to pay down a portion of the first-lien term loan, the agency said.

S&P said it will monitor the company's progress in pursuing the announced transactions.

If the transactions are completed as planned, the agency said it would raise the ratings on the first-lien term loan and revolving credit facility to BB- with 2 recovery rating from B+ with 3 recovery rating. A recovery rating of 2 indicates 70% to 90% expected default recovery.

The agency said it expects to assign a B- rating with 6 recovery rating to a new $300 million to $325 million notes issue if the company were to pursue this issuance alternative. A recovery rating of 6 indicates negligible recovery.

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