TEXT-S&P rates Trimas' proposed debt 'BB'
Sept 19 - Standard & Poor's Ratings Services said today it assigned its 'BB' senior secured debt issue ratings and '2' recovery rating to Bloomfield Hills, Mich.-based TriMas Co. LLC's $650 million credit facilities. TriMas Co. LLC is the wholly owned subsidiary of TriMas Corp., which plans to use the proceeds from the facilities to repay existing bank lines and to fund the repayment of its existing outstanding senior secured notes due 2017. The recovery rating on the proposed first-lien credit facilities is '2', indicating our expectation of substantial (70%-90%) recovery in the event of a default. For the complete recovery analysis, please see the recovery report on TriMas to be published following this report on Ratings Direct. The existing ratings on the industrial manufacturer remain unchanged, including the corporate credit rating of 'BB-'. Our outlook is stable. The ratings on TriMas reflect our view of its "fair" business risk profile and "aggressive" financial risk profile. The company has maintained good credit ratios due to steady free cash flow generation and continued focus on debt reduction. TriMas' operating performance should continue to benefit from moderating demand in the company's global industrial markets in 2012 and further improvement in productivity and efficiency. The company's focus on cost containment and working capital investment led to EBITDA margin improvement to about 18% as of June 30, 2012, compared with an average 15% over the past three years. We expect revenue growth in the mid- to high-single-digits and modest improvement in EBITDA margin for 2012. This could likely result in adjusted leverage of less than 3x. We further expect that TriMas will maintain its credit measures while it expands through acquisitions. The outlook is stable. We expect TriMas to perform well this year considering the current global industrial conditions, and our ratings assume revenue growth in the mid- to high-single-digit area in fiscal 2012, along with steady margin performance. We also expect TriMas to use some of its consistent free cash flow on acquisitions to complement organic growth, while maintaining adjusted total debt to EBITDA leverage of 3.5x to 4.0x. RELATED RESEARCH AND CRITERIA -- Research Update: TriMas Corp. Upgraded To 'BB-' On Good Operating Performance; The Outlook Is Stable, May 4, 2012 -- Criteria Guidelines For Recovery Ratings On Global Industrials Issuers' Speculative-Grade Debt, Aug. 10, 2009 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 RATINGS LIST TriMas Corp. Corporate Credit Rating BB-/Stable/-- New Ratings TriMas Co. LLC $250 mil. revolving credit facility due 2017 BB Recovery rating 2 $150 mil. term loan due 2017 BB Recovery rating 2 $250 mil. term loan due 2019 BB Recovery rating 2 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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