Jack Cooper Holdings Corp. Senior Secured Recovery Rating Revised To #4#; #CCC-# Senior Unsecured Issue Rating Affirmed

Stocks and Financial Services Press Releases Wednesday January 27, 2016 09:10
NEW YORK--27 Jan--Standard & Poor's

NEW YORK (Standard & Poor's) Jan. 26, 2016--Standard & Poor's Ratings Servicessaid today that it has revised its recovery rating on Jack Cooper HoldingsCorp.'s $375 million senior secured notes due 2020 to '4' from '3'. The '4'recovery rating indicates our expectation for average recovery (30%-50%; lowerhalf of the range) of principal in the event of a payment default. Our 'CCC+'issue-level rating on the senior secured notes remains unchanged.

At the same time, we are affirming our 'CCC-' issue-level rating on thecompany's $165 million senior unsecured PIK toggle notes due 2019, which wereissued through Jack Cooper Enterprises Inc. The '6' recovery rating isunchanged, indicating our expectation for minimal recovery (0%-10%) of

principal in a payment default scenario.
Our 'CCC+' corporate credit rating and stable outlook on Jack Cooper HoldingsCorp. are unchanged.

"Our corporate credit rating on Jack Cooper reflects the company's limitedcustomer diversity and its participation in the capital-intensive, pricecompetitive, and cyclical trucking sector," said Standard & Poor's creditanalyst Michael Durand. "The company's position as the largest car hauler inthe U.S. only partially offsets these weaknesses." Jack Cooper operates afleet of over 2,400 rigs (of an estimated 10,250 rigs in its industry) and anetwork of 57 terminals across North America.

The stable outlook reflects our view that Jack Cooper's ongoing efforts toimprove its operating performance will be tempered by industry volatility andthe company's high debt burden.

We could lower our ratings on Jack Cooper if the auto industry experiences aslowdown or operational challenges that cause the company's earnings toweaken--threatening its ability to make interest payments--or if the company'sliquidity becomes constrained, leading us to revise our liquidity assessmentto less than adequate or weak.

We consider an upgrade within the next 12 months unlikely, given the company'shighly leveraged financial profile and its aggressive financial policy.

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