S&P rates Forming Machining loans B, CCC+

S&P said it assigned its B issuer credit rating to Forming Machining Industries Holdings LLC. The outlook is stable.

At the same time, S&P assigned a B issue-level rating and 3 recovery rating to the company's proposed first-lien credit facility, which comprises a $50 million revolving credit facility due 2023 and a $245 million first-lien term loan due 2025. The 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 60%) in the event of a default.

Additionally, S&P assigned a CCC+ issue-level rating and 6 recovery rating to the company's $75 million second-lien term loan due 2026. The 6 recovery rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%) in the event of a default.

“Our rating on FMI (which plans to do business as The Atlas Group) reflects the company's modest size, high customer and program concentration (especially its large exposure to the weak business jet market), the competitive market in which it participates, and high leverage pro forma for the transaction,” S&P said in a news release.

“However, the company's participation on growing platforms, efficient assembly processes, and strong margins partly offset these factors.”

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