S&P: Holley Performance view now developing

Standard & Poor's said it revised its outlook on Holley Performance Products Inc.'s CCC corporate credit rating to developing from negative following the company's announcement that holders of its $150 million 12.25% senior notes have been asked to consider recapitalization alternatives, including the possible extension of the Sept. 15, 2007 maturity date.

In S&P's view, a maturity extension, assuming all other terms remain unchanged, would represent a distressed exchange tantamount to default. If a distressed exchange occurs, the rating would be lowered to D.

However, at the same time, Holley indicated that it has been awarded an important mandate from a major original equipment manufacturer to be the single-source provider of certain component parts for that company's next-generation diesel engine. This new business, which could generate cash flow beginning in 2007, would increase Holley's revenues by 30% from the 2004 level.

Considering the possible benefits to Holley's financial profile of the new OEM business, the outlook could be revised to positive if the bondholders receive adequate value to compensate them for a maturity extension, S&P said.

S&P said the ratings on Holley reflect the company's very weak financial profile, liquidity constraints and poor operating performance in recent years, which more than offset its leading position in a niche segment of the automotive aftermarket.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.