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S&P: Delco Remy outlook stable
Standard & Poor's said it revised its outlook on Delco Remy International Inc. to stable from negative and affirmed its B corporate credit rating on Delco Remy and its CCC+ subordinated debt ratings.
S&P said the outlook revision reflects the stabilization of Delco Remy's credit protection measures, which is the result of management's recent restructuring efforts, operating improvements, and proposed recapitalization that will improve financial flexibility.
S&P also affirmed its B+ rating on Delco Remy's secured credit facility, which will be sized at $120 million in the proposed transaction and which is proposed to expire in June 2007. S&P assigned its B- rating to Delco Remy's proposed $125 million floating-rate second-priority secured notes due 2009 and its CCC+ rating to Delco Remy's proposed $150 million senior subordinated notes due 2012.
In addition, S&P lowered the rating on the company's $145 million senior unsecured notes to CCC+ from B-, because of the deterioration of recovery prospects for these debt holders as a result of the proposed revised capital structure and recent noncash charges.
Proceeds from the proposed transaction, including the proposed second-lien notes and senior subordinated notes, will be used to repay the existing $60 million term loan, reduce revolving credit facility borrowings by $52 million, and repay $140 million senior subordinated notes due 2006.
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