S&P affirms UC after add-on

Standard & Poor’s said it affirmed the B- corporate credit rating on UC Holdings Inc.

The outlook is stable.

The proceeds of the proposed $25 million add-on to its existing $350 million of 9¼% senior secured notes due 2018 will be used to repay borrowings under its asset-backed revolver, S&P said.

The agency also said it affirmed the B- rating on the notes. The recovery rating on these notes is unchanged at 4, indicating 30% to 50% expected default recovery.

S&P also said it affirmed the CCC rating on the $125 million payment-in-kind toggle notes due 2018 issued by Chassix Holdings Inc., a holding company in the group structure.

The recovery rating on these notes is 6, indicating 0 to 10% expected default recovery.

UC’s financial policy will remain very aggressive and its credit metrics are expected to remain weak, but consistent with prior expectations, S&P said.

The ratings also consider the combined entity’s concentrated customer mix and limited geographic diversity amid multiple industry risks that automotive suppliers face, including volatile demand, high fixed costs, intense competition and severe pricing pressures, the agency said.

These weaknesses partially offset an expectation that North American production should continue to rise, S&P said.

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