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Moody's rates TI Automotive loan
Moody's Investors Service said it assigned a prospective B1 rating to the £650 million senior secured credit facilities of TI Automotive Ltd. Concurrently, Moody's assigned to TI Automotive Ltd. a prospective B1 senior implied rating and a prospective B3 senior unsecured issuer rating.
The outlook is negative.
The senior implied rating reflects: i) financial risks from the company's high leverage exacerbated by significant refinancing risk within the next two to three years, despite the proposed changes to its senior credit facility maturity profile, ii) high customer concentration, with three customers accounting for more than 50% of fiscal 2003 consolidated revenues, iii) substantial capex and technology investment requirements, iv) Moody's view that the company's liquidity is limited given the overall size of the business, v) TI Auto's limited product diversification, vi) the risk of potential margin compression due to the aggressive competitive environment and vii) the company's exposure to unexpected warranty costs although these have historically been minimal.
However, Moody's said, the rating also reflects: i) the company's leadership position as a global Tier 1 automotive supplier of fluid carrying systems and fuel storage and delivery systems, ii) the company's presence on a wide array of platforms strengthened by long-term relationships with a significant number of OEMs, iii) the overall resilience of the business even in difficult market conditions, iv) substantial barriers to entry within the industry and v) management's track record in improving TI Auto's operating performance and successfully integrating acquisitions.
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