TEXT-S&P affirms International Wire Group Holdings Inc

Overview
-- U.S.-based wire producer International Wire Group Holdings Inc. has
announced that it is seeking to issue $250 million new senior secured notes
due 2017.
-- We are affirming our 'B+' rating on International Wire Group. We are
assigning a 'B' issue-level rating and '5' recovery rating to the proposed
notes.
-- The stable outlook reflects our expectation that leverage will remain
between 3x and 4x in 2012 and 2013, as International Wire Group's end markets
hold firm in a gradually improving economy.

Rating Action
On Sept. 24, 2012, Standard & Poor's Ratings Services affirmed its 'B+'
corporate credit rating on Camden, N.Y.-based International Wire Group
Holdings Inc. The outlook is stable.

At the same time, we assigned our 'B' issue-level rating (one notch below the
corporate credit rating) to the proposed $250 million senior secured notes of
International Wire Group Inc., a subsidiary of International Wire Group
Holdings Inc. The recovery rating on the notes is '5', indicating our
expectation for modest (10% to 30%) recovery in the event of payment default.

We expect the company to use the proceeds from the proposed notes issuance to
repay its existing debt, to fund a $60 million distribution to shareholders,
and for other fees and expenses. We anticipate that we will withdraw our
ratings on International Wire Group Holdings' existing senior secured notes
and senior PIK toggle notes upon the successful completion of the refinancing.

Rationale
The rating affirmation follows International Wire Group Holdings' announcement
that it intends to issue $250 million new senior secured notes due 2017.
Despite higher pro forma debt balances, as book debt will increase to about
$285 million by year-end 2012, compared with $240 million at year-end 2011, we
believe credit metrics will remain in line with the current rating, with
debt-to-EBITDA of between 3x and 4x in 2012 and 2013, interest coverage in
excess of 3x, and funds from operations (FFO)-to-debt of around 15%.

Under our base case scenario, we expect 2012 EBITDA of approximately $75
million, a mid-single digit percentage increase over 2011, as a result of
stronger volumes, particularly in its bare wire division, because of a
gradually improving economy. We expect a similar improvement in EBITDA in
2013, as a result of a continuing strengthening in International Wire Group
Holdings' end markets, particularly industrial and energy, aerospace and
defense, and automotive and specialty vehicles.

As a result, we expect debt-to-EBITDA of about 4x by year-end 2012, and for
leverage to improve to between 3x and 3.5x by year-end 2013, as a result of
improving EBITDA. We also expect the company will use free cash flow to reduce
the balance of its revolving credit facility (estimated at $45 million, pro
forma for the transaction). We consider these metrics to be in line with the
rating given the company's "vulnerable" business risk profile. We also expect
liquidity to remain adequate to finance internal working capital needs and
capital expenditures. Should International Wire Group Holdings' shareholders
decide to pursue future distributions or share repurchases, we would expect it
to finance the actions in such a manner that liquidity remains adequate and
leverage does not exceed 4x for a sustained period of time.

The ratings on International Wire Group Holdings reflect the company's
vulnerable business risk and "aggressive" financial risk profiles. Our
vulnerable business risk assessment acknowledges the company's exposure to
volatile copper prices, cyclical end markets, and its relatively modest size
and scope. The aggressive financial risk profile reflects the company's
penchant for large dividends relative to its cash flow, despite our estimate
of 2012 and 2013 adjusted debt-to-EBITDA of between 3x and 4x, as well as
adequate liquidity.

International Wire Group Holdings purchases copper rod that it uses to
manufacture copper wire products. Consequently, a sharp decline or decrease in
copper prices can have a significant impact on financial performance. The
former can necessitate selling higher-cost inventories at lower market prices;
the latter can restrict the company from passing through higher copper prices
to customers. International Wire Group Holdings sells its products for a
variety of electrical and data transmission applications whose end markets are
in somewhat cyclical industries, including energy, electronics, and aerospace
and defense. Although several of these markets are relatively strong now,
demand can decline quite a bit during weak economic cycles, resulting in
minimal earnings and weaker credit metrics.

Liquidity
We view International Wire Group Holdings' liquidity as "adequate" based on
the following expectations:
-- Liquidity sources (including cash and availability under the proposed
upsized $175 million asset-based lending {ABL} revolving credit facility) will
exceed uses by at least 1.2x over the next year;
-- Liquidity sources will continue to exceed uses, even if EBITDA were to
decline by 15%; and
-- The company would continue to exceed the availability threshold under
its credit facility, even if EBITDA drops 15%.

Pro forma for the proposed refinancing, we expect International Wire Group
Holdings to have between $10 million and $15 million of cash on its balance
sheet by year-end 2012. Although the company intends to amend its existing ABL
revolver to increase commitments to $175 million, we believe the company's
borrowing base only supports $150 million of availability. After taking into
account existing borrowings, letters of credit, and the ABL's fixed-charge
covenant, which takes effect only if availability under the credit facilities
falls below about $22 million, we estimate the company will have between $80
million and $90 million of availability on its ABL by year-end 2012.

We expect International Wire Group Holdings to generate between $20 million
and $35 million of free cash flow in 2012 and 2013, based on capital
expenditures of between $10 million and $15 million and our expectation that
working capital spending will be modest. While we assume the company will
continue to pay further distributions to shareholders, we would expect the
actions to be financed in such a manner that liquidity remains adequate and
leverage does not exceed 4x for a sustained period of time.

Recovery analysis
For our most recent recovery analysis, please see the recovery report on
International Wire Group Holdings Inc., to be published on RatingsDirect
shortly following the release of this report.

Outlook
The stable rating outlook reflects our expectation that leverage will remain
between 3x and 4x in 2012 and 2013, as International Wire Group Holdings' end
markets hold firm in a gradually improving economy. In our view, this will
cause higher sales volumes to offset weaker pricing for its products.

We would lower our rating if leverage climbs to and remains above 4x for a
sustained period of time, possibly as a result of a sharper-than-expected drop
in sales prices and EBITDA margins or as a consequence of more
aggressive-than-anticipated dividends. Specifically, we could lower the rating
if margins drop about 200 basis points from current levels.

In our view, the company's relatively small size and scope, as well as the
less transparent operating strategy and financial policy inherent with private
equity-owned firms, will preclude an upgrade over the next 12 months.

Related Criteria And Research
-- Issuer Ranking: North American Metals And Mining Companies, Strongest
To Weakest, July 10, 2012
-- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
-- Key Credit Factors: Methodology And Assumptions On Risks In The Metals
Industry, June 22, 2009
-- Business Risk/Financial Risk Matrix Expanded, May 27, 2009
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Ratings List
New Rating

International Wire Group Inc.
Senior Secured
US$250 mil sr nts due 12/31/2017 B
Recovery Rating 5

Ratings Affirmed

International Wire Group Holdings Inc.
International Wire Group Inc.
Corporate Credit Rating B+/Stable/--

International Wire Group Holdings Inc.
Senior Unsecured B-
Recovery Rating 6

International Wire Group Inc.
Senior Secured B+
Recovery Rating 3