Manitowoc Co. Inc. Downgraded To #B+# On Spin-Off T Proposed Senior Secured Notes Rated #B+# (Recovery: #3#)

Stocks and Financial Services Press Releases Wednesday January 27, 2016 09:16
NEW YORK--27 Jan--Standard & Poor's

NEW YORK (Standard & Poor's) Jan. 26, 2016--Standard & Poor's Ratings Servicestoday said that it has lowered its corporate credit rating on Wisconsin-basedcrane manufacturer Manitowoc Co. Inc. to 'B+' from 'BB-'. The outlook isstable.

At the same time, we assigned our 'B+' issue-level rating and '3' recoveryrating to the company's proposed $250 million senior secured second-lien notesdue 2024. The '3' recovery rating indicates our expectation of meaningful(50%-70%; lower half of the range) recovery in the event of a payment default.

We expect Manitowoc to use the proceeds from the spin-off transaction, alongwith a $1.3 billion dividend from Manitowoc Foodservice Inc., to repay itsexisting debt and related fees and expenses.

"The downgrade follows Manitowoc Co. Inc.'s nearly completed spin-off of itsfood service equipment manufacturing business," said Standard & Poor's creditanalyst Jaissy Lorenzo. "The food service business previously helped to offsetsome of the cyclicality inherent in the company's cranes segment and providedit with some diversification." The remaining company's exposure to highlycyclical and competitive end markets and its limited size and scope increaseits vulnerability to economic downturns. In addition, the company has moderatecustomer concentration. Therefore, we have revised our assessment ofManitowoc's business risk profile to weak from fair.

The stable outlook reflects our expectation that significant declines in thecompany's operating performance, caused by the stronger dollar and softness inthe oil and gas sector and the emerging markets, will be partially offset byrestructuring initiatives. We expect Manitowoc Co. Inc.'s margins to improveto the mid-to-high single digit percent area while it maintains adebt-to-EBITDA metric of less than 5x over the next 12 months because of therecent cost-reduction initiatives that management implemented in response tothe weak operating environment.

We could lower our ratings on Manitowoc if management's restructuringinitiatives do not improve its operating performance as expected, causing thecompany's credit measures to remain significantly weaker for a sustainedperiod--for instance, a total debt-to-EBITDA metric of greater than 5x. We

could also lower the ratings if a weaker operating performance ordebt-financed activities lead to the same result.

Although less likely in the near term, we could raise our rating on ManitowocCo. if the company can enter into a period of sustained margin improvementsuch that the company's adjusted total debt-to-EBITDA metric decreases below3x under good market conditions to provide it with a cushion during cyclicaldownturns. If the company can improve and sustain its margins, this would alsobenefit its business risk profile.

Latest Press Release

SET announces 63 listed firms, five CEOs nominated for SET Awards 2018

63 listed companies and five CEOs have been nominated for SET Awards 2018. The announcement and the award presentation, which is the fifteenth of its kind, will take place on November 27, 2018. SET President Pakorn Peetathawatchai said that The Stock...

Fitch Ratings: Global Power Synergy Still on Watch after Appeal of Regulator Decision

The ratings on Global Power Synergy Public Company Limited (GPSC) remain on Rating Watch Negative (RWN) after the company said it submitted an appeal of the Energy Regulatory Commission's (ERC) order to block GPSC's acquisition of GLOW Energy Public...

Fitch Affirms Makro#s Rating at #A(tha)#; Outlook Stable

Fitch Ratings (Thailand) Limited has affirmed Siam Makro Public Company Limited's National Long-Term Rating at 'A(tha)'. The Outlook is Stable. KEY RATING DRIVERS Overseas Expansion Drives Rising Leverage: Makro's funds from operations (FFO) adjusted...

Fitch Affirms CP ALL#s Ratings at #A(tha)#; OutlookStable

Fitch Ratings (Thailand) Limited has affirmed retailer CP ALL Public Company Limited's National Long-Term Rating at 'A(tha)' with a Stable Outlook. Fitch has also affirmed the National Long-Term Rating of its secured bonds at 'A(tha)', the National...

KTC achieves major milestone with a net profit of 3.911 billion Baht in Q3,with preparations in motion to diversity into Nano and Pico Finances.

KTC declares a net profit for the end of Q3 of 3.911 billion Baht. Profits have grown 65 percent due to a surge in credit card spendings, receivables from credit cards and personal loans, along with the upholding of approval standards within appropriate...

Related Topics