Moody's upgrades Autocam

Moody's Investors Service said it upgraded the rating on Autocam Corp.'s first-lien bank credit facilities to B3 from Caa1, Autocam France Sarl's senior secured credit facilities to B3 from Caa1 and raised the company's speculative grade liquidity rating to SGL-3 from SGL-4. Autocam's Caa1 corporate family rating and the Ca rating on its senior subordinated notes have been affirmed.

The outlook is negative.

The upgrade reflects Autocam's new $75 million second-lien term loan and a reduction of roughly $69 million in first-lien debt.

Moody's said that by reducing the amount of first-lien debt, collateral coverage and recovery expectations for first-lien debt holders have improved. Autocam's liquidity profile benefits from resulting higher cash balances, a significant reduction in near-term amortization requirements, improved availability to the company's revolving credit facilities from changes to its financial covenants and lower utilization of revolving credit commitments.

The agency noted that the revised capital structure incorporating the second-lien term loan will only marginally increase Autocam's leverage and interest expense and that the outlook remains negative due to structural challenges in the automotive industry and limited visibility on production volumes in the North American market. However, by alleviating short-term liquidity pressure, the transaction allows Autocam to focus on its long-term business strategy, Moody's said.

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