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Moody's lowers Keystone Automotive loans to B2, Caa2
Moody's Investors Service said it downgraded Keystone Automotive Operations, Inc.'s corporate family and probability-of-default ratings to B3 from B2.
Moody's also lowered the ratings of the company's senior secured term loan to B2 (LGD3 39%) from B1 and its guaranteed senior subordinated notes due 2013 to Caa2 (LGD5 85%) from Caa1.
The outlook remains negative.
The ratings reflect the company's credit metrics deterioration, which occurred in the second half of last year and which Moody's anticipates will continue through this year. The problems occurred when the company acquired Reliable Investments, Inc. in December 2005, which resulted in customer overlap and related revenue losses, the agency said.
The company also remains vulnerable to further erosion in the truck and SUV markets and increasing competitive pricing.
The company should be able to rid some duplicative costs related to the acquisition this year, Moody's said.
For the year ended March 31, the company's debt-to-EBITDA ratio was 6.8 times. In order to boost its outlook, the company must keep its debt-to-EBITDA ratio below 5.5 times, the agency said.
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