S&P affirms Hawk

Standard & Poor's said it affirmed Hawk Corp.'s B corporate credit and B- senior unsecured ratings and removed them from CreditWatch where they were placed with negative implication on Jan. 4, 2007 following the announcement of a government inquiry.

The outlook is negative.

"The rating actions follow the completion of the tender offer and the resulting improved liquidity position of the company. The negative outlook reflects uncertainty regarding the potential outcome of an ongoing [Securities and Exchange Commission] investigation," S&P credit analyst Gregoire Buet said in a written statement.

The ratings reflect the company's presence in cyclical and competitive end markets, its modest scale of operations despite fair niche-market positions and a highly leveraged financial profile characterized by high debt levels, the agency said.

The company's strengths include fair positions in niche markets, geographic diversity, well-established customer relationships and a significant proportion of aftermarket sales that somewhat offset the volatility of its end-markets, S&P said.

However, the company's scope of operation is narrow, product diversity is limited, and the industry is competitive, making Hawk vulnerable to adverse market or operational changes, the agency said.

Pro forma for recent debt reduction, the issuer's total debt-to-EBITDA ratio adjusted for leases and unfunded pension obligations is about 4.8 times.

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