S&P puts Forming Machines on watch

S&P said it placed all its ratings for Forming Machining Industries Holdings on CreditWatch with negative implications.

The CreditWatch placement mirrors the uncertainty surrounding the length and impact of the planned MAX production halt. Forming Machining’s revenues and earnings will be affected by Spirit AeroSystems Inc.'s plans to suspend production on the 737 MAX starting in January after Boeing announced it would halt production and requested Spirit to halt deliveries.

The 737 MAX represents a major portion of FMI's revenue, so this will likely hurt the company's credit metrics significantly depending on the duration of the halt and whether the company can reduce costs related to the program, the agency said.

“However, because we do not know how long the production halt will last and at what rate FMI will be producing once production restarts, we are uncertain as to the magnitude of the impact,” S&P said in a press release.

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