TEXT-S&P assigns WP CPP Holdings 'B' rating

Overview
-- WP CPP Holdings LLC is entering into a new credit facility to
refinance existing debt and to acquire ESCO's Turbine Technologies Group.
-- We are assigning our 'B' corporate credit rating to the company.
-- At the same time, we are assigning our 'B' issue rating and '3'
recovery rating to the proposed first-lien revolver and term loan B, and
'CCC+' issue rating and '6' recovery to the second-lien term loan.
-- The stable outlook reflects our expectation that credit ratios will
improve gradually over the next year as a result of earnings growth, debt
reduction, and margin improvement.

Rating Action
On Dec. 6, 2012, Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to WP CPP Holdings LLC (CPP). The outlook is stable. At the same
time, we are assigning our 'B' issue rating and '3' recovery rating to the
proposed $515 million secured first-lien credit facility, which consists of a
$100 million revolver and a $415 million term loan. The '3' recovery rating
indicates our expectation of substantial (50%-70%) recovery in the event of
payment default. For the $185 million second-lien term loan, we are assigning
our 'CCC+' issue rating and '6' recovery rating.

Rationale
Our ratings on CPP reflect our expectations that leverage (debt to EBITDA),
although initially high after the proposed transaction, will improve steadily
over the next 12 months because of earnings growth and debt reduction from
solid free cash flows. We believe revenues and earnings will show solid growth
over the next year because of the strength in commercial aerospace market,
operational efficiency initiatives, and contributions from Turbine
Technologies Group (TTG, not rated). We assess the company's business risk
profile as "fair," reflecting its position as a leading provider of sand and
investment castings for commercial aerospace and other markets (although it is
much smaller than some of its main competitors), relatively good customer and
program diversity, high barriers to entry, and efficient operations. We assess
the company's financial risk profile as "highly leveraged" based on the
company's high debt leverage and very aggressive financial policy. We assess
liquidity as "adequate" under our criteria.

The company, which is owned by private equity firm Warburg Pincus, plans to
use the proceeds from the new facility and a $47 million equity infusion to
refinance existing debt and fund the acquisition of TTG. CPP is acquiring TTG,
a manufacturer of superalloy precision investment cast components used
predominantly in the aerospace and power generation markets, from ESCO Corp.
(not rated). Credit measures will initially be weak, with pro forma debt to
EBITDA above 6x, funds from operations (FFO) to debt below 10%, and EBITDA
interest coverage of 2.2x. However, we expect modest improvement over the next
12 months because of growing earnings, as a result of the strength in the
commercial aerospace market and efforts to improve margins as well as debt
reduction from free cash flows. In 2013, we expect debt to EBITDA to decline
to 5x-5.5x and FFO to debt to improve to 10%-15%, barring further
debt-financed acquisitions.

CPP manufactures sand and investment castings for the commercial aerospace
(51% of sales pro forma for the TTG acquisition), military (39%), and
energy/industrial markets (10%). The company produces components for aircraft
engines, aerostructures, industrial gas turbines, missiles, nuclear and other
pump casings, and impellers. CPP has operations in the U.S., France, and
Mexico. The acquisition of TTG will broaden CPP's product scope and depth by
introducing aerospace components used in the "hot section" of aircraft engines
(i.e. blades and vanes), as well as increasing its content on industrial gas
turbines.

The commercial aerospace market is currently in a cyclical upturn, and the
major aircraft and engine manufacturers are increasing production
significantly to work down huge order backlogs. Although defense spending is
likely to be flat to declining for the foreseeable future, CPP's products are
used in the aftermarket, including rotating parts that wear quickly, which
could see more stable funding levels. The energy market has favorable
prospects as the price of natural gas, which is currently more competitive in
relation to coal, could result in increased demand for industrial gas turbines.

CPP has relatively good program diversity for the size of the company. The
company has product content on the Boeing 737, 747-8 and 777, as well as
Airbus' A320. CPP is also represented on the 787 and A380, but content on
these platforms is small compared with the other programs because of low
production rates and shipset values. Revenues from the 787 should increase as
production rises. Military programs on which CPP has content include the C-17,
F-15, F-18, and F-22, which are all mature programs that are likely to end
production in the next few years. However, the company sells parts into the
aftermarket, so its parts will be needed for many years after production of
new planes ends. The company's customer base is relatively well diversified
for an aerospace supplier, and its top 10 customers comprise about 39% of
sales and the largest, General Electric, less than 10%.

Although CPP is one of the leading manufacturers of castings in the U.S., its
two main competitors, Precision Castparts and Alcoa, are both much larger. In
addition, there are a number of smaller competitors that have more limited
capabilities. The industry has high barriers to entry because of the
complexity associated with the manufacturing process, Federal Aviation
Administration certification requirements, and long lead times for customer
acquisitions. The company has efficient operations, as evidenced by solid
EBITDA margins.

Liquidity
We believe that liquidity will be "adequate," pro forma for the proposed
transaction. We expect sources of liquidity to exceed uses by at least 1.2x in
the next 12 months and that sources will exceed uses even if EBITDA were to
decline by 15%, the minimum required levels under our criteria for an adequate
designation.

We expect the company to have only minimal cash balances after the close of
the proposed transaction, but access to a $100 million undrawn revolver. We
expect the company to generate more than $35 million of annual free cash flow
for the next two years. Debt maturities are minimal over the next few years,
primarily $4.2 million per year of amortization on the new first-lien term
loan. The only financial covenant limits first-lien net leverage (as defined),
but only if more than 20% of the revolver is drawn. The covenant starts at
5.75x and steps down to 4.5x in December 2017.

Recovery analysis
Please see the recovery report to be published shortly on RatingsDirect.

Outlook
The outlook is stable. Revenues and earnings should see solid growth over the
next 12 months as a result of the strength in the commercial aerospace market
and efforts to reduce costs and improve pricing. Higher earnings and debt
reduction using excess free cash flow should result in steadily improving
credit ratios. We do not expect to raise the ratings in the next 12 months but
could do so if cash flow and debt reduction is greater than we expect,
resulting in debt to EBITDA below 5x and FFO to debt above 15%. We are less
likely to lower the ratings, but we could do so if the commercial aerospace
market weakens, or if debt-financed acquisitions or dividends result in debt
to EBITDA above 7x or FFO to debt below 8%.

Related Criteria And Research
-- Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18,
2012
-- Standard & Poor's Standardizes Liquidity Descriptors for Global
Corporate Issuers, July 2, 2010
-- Key Credit Factors: Methodology and Assumptions On Risks In The
Aerospace And Defense Industries, June 24, 2009

Ratings List

New Rating; Stable Outlook

WP CPP Holdings LLC
Corporate Credit Rating B/Stable/--

New Ratings

WP CPP Holdings LLC
Senior Secured
$100 mil revolver due 2017 B
Recovery Rating 3
$415 mil term B ln due 2019 B
Recovery Rating 3
$185 mil 2nd lien ln due 2020 CCC+
Recovery Rating 6

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.