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TEXT-S&P: reports of sale don't affect Metaldyne rating, outlook
July 25, 2012 / 2:14 PM / 5 years ago

TEXT-S&P: reports of sale don't affect Metaldyne rating, outlook

 (The following statement was released by the rating agency)
 July 25 - Standard & Poor's Ratings Services said today that its rating on
Plymouth, Mich.-based automotive supplier Metaldyne LLC (B+/Stable/--) is not
currently affected by recent media reports regarding the potential sale of the
company by its current sponsor, Carlyle Group. We could, however, take a rating
action if further details regarding the proposed capital structure and new
owners emerged, especially if such a transaction would lead to credit metrics
much weaker than our current expectations for the 'B+' rating.

Currently, with no details available on the post-transaction capital and 
ownership structure, the announcement has no rating implications. Still, any 
potential transaction involving an increase in leverage would result in a 
CreditWatch listing given the company's current "weak" business risk profile 
and "aggressive" financial risk profile in our assessment. For instance, an 
increased likelihood that a sale of the company to new owners would include a 
complete refinancing of existing debt, leading to leverage exceeding 5x with 
potentially aggressive financial policies, could prompt us to place the 
corporate credit rating on CreditWatch with negative implications.

For the 'B+' rating, we currently assume leverage will remain about 4x or less 
(including our adjustments to add to debt the net present value of operating 
leases, underfunded postretirement obligations, and accounts-receivable sold). 
The stable rating outlook reflects our belief that Metaldyne will generate 
positive free operating cash flow in the next 12 months with improved 
year-over-year EBITDA margins, given the somewhat favorable trend for vehicle 
production in North America, though slower growth in Europe somewhat offsets 

For our most recent credit analysis on Metaldyne, see "Summary: Metaldyne 
LLC," published April 27, 2012, on RatingsDirect.

 (New York Ratings Team)

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