S&P puts VAC on watch

Standard & Poor's said it placed the B long-term and B short-term corporate credit ratings on VAC Holding GmbH on CreditWatch with negative implications.

This reflects concern that the company's headroom to meet its covenants is weakening and there is a risk that it may breach them, the agency said.

VAC's performance is currently below expectations, and improvements may not materialize in the medium term, the agency added.

Ratings remain constrained by its highly leveraged financial profile, fragmented industry, price erosion and relatively high capital intensity, S&P said.

Ratings are supported by the company's strong position as one of the leading players in the market for industrial-use magnets, strong customer diversity, technological know-how and good product mix, the agency said.

As of June 30, the issuer's adjusted debt-to-EBITDA ratio of about 6 times.

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