Nov 28 - Standard & Poor's Ratings Services today assigned its 'B-' issue
rating and '5' recovery rating to Troy, Mich.-based commercial truck part
supplier Meritor Inc.'s proposed $150 million senior unsecured
convertible notes due 2026, issued under Rule 144A without registration rights.
The '5' recovery rating indicates our expectation of modest (10% to 30%)
recovery in the event of a payment default. Meritor has indicated that it will
use the net proceeds from the proposed note offering to repay outstanding debt.
The 'B' corporate credit rating on Meritor reflects our assessment of the
company's financial risk profile as "highly leveraged" with debt to EBITDA of
5.9x and the business risk profile as "weak" with exposure to the highly
cyclical commercial-vehicle markets. Although the company has improved its
operational performance, we expect that economic activity will remain weak in
Europe and Latin America in 2013.
RELATED CRITERIA AND RESEARCH
-- Criteria Guidelines For Recovery Ratings On Global Industrials
Issuers' Speculative-Grade Debt, Aug. 10, 2009
-- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
Corporate Credit Rating B/Stable/--
$150 mil sr unsecd convertible notes due 2026 B-
Recovery Rating 5
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