TEXT-S&P: Titan International offer has no rating effect
Aug 13 - Standard & Poor's Ratings Services said today that its corporate credit rating and outlook on Titan International Inc. (B+/Stable/--) are not immediately affected by the company's announcement that it has made a recommended share offer to acquire the entire share capital of Titan Europe Plc (not rated), a manufacturer of wheels, undercarriage components, and assemblies for tracked and wheeled off-road vehicles. Based on Titan Europe's existing debt balance and the share-based nature of the transaction, we believe this could be a moderately leveraging event, which we view to be relatively neutral to Titan International's credit profile. We expect that Titan International's operating results will continue to improve in 2012 as a result of good demand expectations in the company's agricultural end market and increasing demand expectations in its earthmoving/construction end market. Credit measures will likely remain stronger than our expectations for the rating given currently favorable industry fundamentals (as of June 30, 2012, total debt to EBITDA was about 1.3x and funds from operations to total debt was about 40%), but we believe these metrics will remain volatile given the end market cyclicality. We consider total debt to EBITDA of 4x-5x and FFO to total debt of 10%-15% to be appropriate for the rating.