S&P rates Ryerson notes B+

Standard & Poor's said it affirmed Ryerson Inc.'s B+ corporate credit rating and removed its ratings from CreditWatch, where they were placed with negative implications on July 24 following the company's announcement that it agreed to be acquired by Platinum Equity for $2 billion.

S&P assigned a B+ senior secured rating and 4 recovery rating to Ryerson's proposed $150 million floating-rate senior secured notes due 2014 and $425 million senior secured notes due 2015.

The outlook is negative.

The affirmation considers the prospects for debt repayment as a result of improved operating results and inventory management, according to the agency.

The ratings reflect the company's lower margins relative to some of its peers, softening end-market demand, weak credit measures for the rating and concerns about working capital management, S&P said.

Pro forma for the transaction, the issuer's total debt-to-EBITDA ratio (adjusted for pension and health-care liabilities and operating leases and excluding the benefits of liquidating LIFO layers) is about 7.3 times for the 12 months ended June 30, the agency said. Even with the positive LIFO liquidation effect, its debt-to-EBITDA ratio is still aggressive at 6.1 times, S&P said.

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