S&P ups Klöckner outlook to positive

Standard & Poor's said it revised Klöckner & Co. International GmbH's outlook to positive from stable, reflecting improved credit protection measures in the fourth quarter of 2005, and affirmed the company's B+ long-term corporate credit rating and the B- subordinated debt rating on Klöckner Investment SCA's €260 million bond due 2015.

S&P said the ratings on Klöckner reflect its high leverage, relatively low cash generation and high level of working-capital intensity and the competitive and fragmented nature of the metal-distribution industry. Following the leveraged buyout of Klöckner by private equity firm Lindsay Goldberg & Bessemer in March 2005, pro forma 2005 net debt to adjusted EBITDA, less change in inventory, was about 3x.

At the same time, the agency noted Klöckner's good customer, product and geographic diversification and its position as Europe's leading independent metal distributor. With sales of €4.96 billion, Klöckner is Europe's third-largest metal distributor and the largest independent player, with a market share of about 11%.

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