TEXT-S&P keeps New Enterprise Stone & Lime on watch negative

Thu Dec 13, 2012 4:22pm EST

Related Topics

Overview
     -- U.S.-based New Enterprise Stone & Lime Co. Inc. has failed to provide 
annual and quarterly financial reports as required under its note indentures. 
Failure to provide the reports by Jan. 3, 2013 constitutes a default under the 
indentures.
     -- New Enterprise is making efforts to file its delinquent financial 
statements prior to the default date.
     -- It is our expectation that New Enterprise will file its 10-K and 
first-quarter 10-Q prior to the default date, although no assurances can be 
provided that the filings will not be further delayed.
     -- The ratings on New Enterprise, including the 'CCC-' corporate credit 
rating, remain on CreditWatch with negative implications.
 
Rating Action
On Dec. 13, 2012, Standard & Poor's Ratings Services said its ratings on New 
Enterprise Stone & Lime Co. Inc., including its 'CCC-' corporate credit 
rating, remain on CreditWatch with negative implications. 

Rationale
The continued CreditWatch listing follows the failure of New Enterprise Stone 
& Lime to file its already delinquent annual and quarterly financial reports 
on Form 10-K and 10-Q. Also, the trustee under the existing notes has provided 
notice to the company that New Enterprise is not in compliance with the 
financial reporting requirements of the indentures. 

Failure to provide such reports by Jan. 3, 2013, would result in an event of 
default under the indentures. New Enterprise is endeavoring to provide 
financial statements prior to that date. Our baseline expectation is that the 
company will file its 10-K and first-quarter 10-Q prior to the deadline, 
however, there can be no assurances that the preparation and filing of these 
statements will not be further delayed.

In addition to technical defaults under various debt obligations, the delayed 
filing limits visibility of the company's operating results and raises concern 
that liquidity could become more constrained than we previously anticipated if 
cash flows are weaker than our most recent estimates. However, we have been 
provided with information from the company regarding its current liquidity 
situation, which appears to be sufficient for near-term needs as long as the 
company's asset based revolving credit lenders continue to provide 
availability under the company's $170 million revolving credit facility.

New Enterprise is a privately held company that sells construction materials 
including aggregates, concrete, and concrete products; engages in highway 
construction and paving; and provides traffic safety services and equipment. 
Its operations are concentrated in Pennsylvania and western New York.

CreditWatch
We will review the CreditWatch listing once the company files its delinquent 
annual and quarterly reports and after we have had an opportunity to discuss 
the company's liquidity, the state of its internal controls, and its most 
recent operating performance.
We could affirm our ratings and remove them from CreditWatch if the company 
resolves any potential default under its indentures, and if it appears that 
2012 and 2013 and future operating cash flows will be neutral or modestly 
positive as per our estimates. 
We would lower our rating to 'D' if the company fails to meet the Jan. 3, 
2013, date for filing its delinquent financial statements or if lenders pursue 
remedies under any defaults and demand payment. 

Related Criteria And Research
     -- Use Of CreditWatch And Outlooks, Sept. 14, 2009
     -- General Criteria: How Standard & Poor's Uses Its 'CCC' Rating, Dec. 
12, 2008

Ratings List 
Ratings On CreditWatch
New Enterprise Stone & Lime Co. Inc.
 Corporate Credit Rating                CCC-/Watch Neg/--  
 Senior Secured                         CCC-/Watch Neg     
  Recovery Rating                       3                  
 Senior Unsecured                       C/Watch Neg        
  Recovery Rating                       6                  

Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings referenced 
herein can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.
FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article