S&P trims Aludyne

S&P said it trimmed its ratings on UC Holdings Inc. (Aludyne Inc.) to CCC+ from B- and its senior secured first-lien term loan to B- from B.

“The downgrade reflects Aludyne's weakening liquidity due to negative free cash flow and increased refinancing risk for its first-lien term loan as credit market conditions have weakened. The company has generated over $75 million of negative FOCF in the first half of 2022 due to outsized working capital investments and increased capital spending required to support Aludyne's recent ramp in sales growth associated with several new original equipment manufacturer (OEM) program launches and general pickup in North American vehicle production,” S&P said in a press release.

Negative cash flow, increasingly tough credit market conditions and risks on the recovery of auto production could create trouble for refinancing the company’s term loan that becomes current on Nov. 15, the agency warned.

However, sales growth and the widening of the EBITDA margin could lead to leverage under 4x for 2022, S&P noted.

The outlook remains developing.

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