S&P gives Tube City loan BB-, notes B-

Standard & Poor's said it assigned its senior secured bank loan rating of BB- and a recovery rating of 1 to the proposed first-lien $140 million term loan due in 2014 of Tube City IMS Corp. (B+/stable).

The agency also said it assigned its B- subordinated debt rating to the company's proposed $250 million senior subordinated notes due 2015, which are based on preliminary terms and conditions and are predicated on the completion of the acquisition of the company by Onex Partners and the related financings, substantially in the form currently anticipated.

Proceeds from the first-lien term loan, the subordinated notes, $215 million in equity and $46 million to be borrowed on a new $165 million senior secured asset-based revolving credit facility (unrated) will be used to refinance existing debt, make modest additional capital expenditures and pay transaction expenses, the agency noted.

According to S&P, the ratings on Tube City reflect the company's vulnerable business risk profile because of its limited diversity, exposure to the cyclical steel industry, customer concentration risk and very aggressive financial policies.

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