Accuride Ratings Affirmed Following Announcement Of $90 Million Term Loan Add-On, Outlook Remains Stable

Stocks and Financial Services Press Releases Wednesday October 25, 2017 09:10
NEW YORK--25 Oct--S&P Global Ratings
NEW YORK (S&P Global Ratings) Oct. 24, 2017--S&P Global Ratings today affirmed its 'B' corporate credit rating on Accuride Corp. The outlook is stable.

At the same time, we affirmed our 'B' issue-level rating on the company's secured term loan due November 2023. The '3' recovery rating remains unchanged, indicating our expectation for meaningful recovery (50%-70%; rounded estimate: 60%) in the event of a payment default.

The affirmation follows Accuride's announcement that it is planning to issue a $90 million add-on to its existing term loan B due November 2023. The company plans to use the proceeds from the add-on, along with $33 million of additional equity, to fund its acquisition of mefro wheels GmbH, a leading European provider of steel wheels. This is the second acquisition that Accuride has announced in 2017 following its acquisition of KIC (a North America-based wheel and wheel-end supplier), which it completed earlier this year.

The stable outlook on Accuride reflects our expectation that, pro forma for the company's acquisitions of KIC LLC and Mefro, its leverage will remain in line with our expectations for the current rating with debt-to-EBITDA of less than 5x. We believe that these acquisitions will provide the company with incremental revenue growth as it continues to execute on its global expansion initiatives. In addition, we expect the company to benefit from increased class 8 commercial vehicle production in 2018 and stable demand in the class 5-7 markets, which should provide it with the opportunity to modestly improve its credit metrics over the forecast period.

We could lower our ratings on Accuride over the next 12 months if the company's debt-to-EBITDA exceeds 5x or its FOCF-to-debt ratio declines to less than 5% on a sustained basis. This could occur if Accuride experiences key missteps while integrating its recent acquisitions or if the company takes on a more aggressive financial policy such that additional debt-financed acquisitions increase its debt-to-EBITDA above 5x. Additionally, we could lower our ratings if the company's EBITDA margins meaningfully deteriorate due to elevated material costs or increased pricing pressure.

Although unlikely over the next year, we could raise our ratings on Accuride if the company maintains debt-to-EBITDA of less than 5x, a FOCF-to-debt ratio of more than 5%, and our view of the company's overall business risk improves. This could occur if Accuride's international growth strategy allows the company to achieve enough scale and geographic diversity to leverage these benefits and improve its profitability.


Latest Press Release

Bangkok Bank reports third quarter 2019 net profit of Baht 9,438 million

In 2019, the Thai economy is forecast to expand at a slower rate than in 2018. Slowing global growth, intensifying trade tensions and the unrelentingly strong Baht have weighed on both exports and tourism. Meanwhile, private consumption and private...

KTC declares 4.205 billion in first nine months net profits. Receivables growth hit an all-time high in the past two years with plans to expand member base and fortify quality of ports.

KTC announces net profits for the first nine months with a 8 percent growth at 4.205 billion. Budget will be allocated to stimulate marketing activities and expand member base. Policy to expand member base and in main business caused portfolio to have...

Witnessing Thai Peoples Lack of Financial Discipline, GoBear Seizes Opportunity to Organize Seminar on Financial Health GoBear Fin Detective #สืบฟินวินทุกเรื่องเงิน And Releases Latest Survey on What Causes Thais Unsuccessful in Achieving Financial Go

GoBear Thailand, Asia's leading financial supermarket, has invited celebrities and financial experts to participate in the seminar "GoBear Fin Detective #สืบฟินวินทุกเรื่องเงิน," aiming to encourage Thai people to pay attention to their financial health,...

TBANK Q3 2019 profit reaches record launches ThanachartDRIVE

Thanachart Bank Public Company Limited (TBANK) reported a consolidated net profit of 4,054 million baht for the third quarter of 2019, improving 12.86% from the previous quarter. Mr.Praphan Anupongongarch, Chief Executive Officer and President of...

Photo Release: EXIM Thailand and EXIM Bank Malaysia Discuss Ways to Promote Thai and Malaysian Trade and Investment

Mr. Pisit Serewiwattana (third left), President of Export-Import Bank of Thailand (EXIM Thailand), and EXIM Thailand's management welcomed Dato' Shahrul Nazri Abdul Rahim (third right), President and Chief Executive Officer of Export-Import Bank of...

Related Topics