Fitch might downgrade Harsco

Fitch Ratings said it placed the ratings for Harsco Corp. on Rating Watch Negative following the announcement that the company is exploring the separation of the Metals and Mining businesses.

The actions affect $1 billion of total debt, including $200 million of undrawn amounts under the revolving credit facility after the company drew on the revolver to fund the repayment at maturity of $250 million of senior notes on Oct. 15, 2015.

Fitch said the Negative Watch reflects its belief the potential separation will reduce the diversification and scale of Harsco's revenues and profitability, given the company's already small size and that the Metals and Mining segment represents roughly two-thirds of revenues and one-third profitability on a trailing 12-month basis. Annual revenues will be $625 million to $675 million versus roughly $1.8 billion on a pre-separation basis, while operating profit margins will be in the low double digits, versus high single digits presently.

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