S&P cuts Forming Machines

S&P said it downgraded Forming Machining Industries Holdings LLC and the ratings on its $50 million revolver and $260 million first-lien term loan to B- from B. The recovery ratings remain 3 and S&P removed the ratings from CreditWatch with negative implications, where they were placed on Dec. 23. The outlook is negative.

The agency also cut the issue-level rating on the company's $60 million second-lien term loan to CCC from CCC+ and removed it from CreditWatch. The recovery rating remains 6.

“We expect FMI's credit metrics to deteriorate as a result of the Boeing 737 MAX production suspension and low production level when it resumes. Spirit AeroSystems Inc. announced last week that it expects to produce components for 216 MAX jets in 2020 based on discussions it has had with Boeing Co. FMI supplies its parts for the MAX through Spirit and the MAX is a significant portion of the company's revenue,” said S&P in a press release.

S&P said it now forecasts debt to EBITDA of 8.6x-9x in 2020, up from its previous expectation of 5.4x-5.8x. “While we expect the company to take actions to cut costs, including already completed layoffs, this may not be sufficient to offset the earnings decline from the lower revenue,” the agency said.

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