Moody's rates Autocam

Moody's Investors Service said it has assigned initial ratings to the debt of Autocam Corp. These ratings include a B1 to the company's senior secured bank facility (consisting of $108 million in domestic U.S. dollar and euro term loans, plus a $50 million multi-currency revolver) and B3 to its $140 million of Rule 144A unsecured senior subordinated notes.

The company's senior implied rating is B1 and the outlook is stable.

Moody's said the financing is associated with the leveraged acquisition of Autocam in a private transaction by a consortium of investors including Goldman Sachs Capital Partners LP, Transportation Resource Partners, and existing Autocam senior management. The valuation assigned to the purchase is about $390 million.

The senior secured and senior implied ratings reflect a strong track record of increasing revenues, healthy margins and EBITDA, the prospects for continued growth, the longer term nature of the contracts underlying Autocam's revenue stream, the fact that the company in the vast majority of its client relationships is a sole source provider, the breadth of its business across several segments in the automotive component field, the relative stability of its program awards, and favorable trends by major tier 1 auto suppliers to outsource high- and ultra-precision metal components.

Despite these strengths, debt multiples associated with the purchase as adjusted for material operating leases are significant. Although the prospects for additional growth are favorable, growth can also generate incremental capital investment and working capital requirements beyond a "steady state" condition. Further, as a tier 2 provider in the automotive component sector, the company continues to face price pressure which originates at the OEM level.

© 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.