Moody's may downgrade Tube City

Moody's Investors Service said it placed Tube City IMS Corp.'s B1 corporate family and probability-of-default ratings, B1 (LGD3, 43%) guaranteed first-lien revolving credit facility and term loan due 2010 and B3 (LGD5, 86%) guaranteed second-lien term loan due 2011 under review for possible downgrade following Onex Corp.'s announcement that it has agreed to acquire Tube City in a transaction valued at $720 million, including equity and debt.

The agency said its review will assess the impact of increased leverage on Tube City's credit profile and capital structure; the overall debt service capabilities of the company in light of the acquisition and higher debt levels; the amount of equity investment by Onex Partners II, Onex's $3.5 billion private equity fund, which is expected to be $240 million; and Tube City's strategic positioning within Onex.

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