December 10, 2012 / 2:21 PM / in 5 years

TEXT-S&P summary: Lupatech S.A.

(The following statement was released by the rating agency)

Dec 10 -


Summary analysis -- Lupatech S.A. --------------------------------- 10-Dec-2012


CREDIT RATING: SD/--/-- Country: Brazil

Primary SIC: Metal coating and

allied services

Mult. CUSIP6: 550436

Mult. CUSIP6: 550438


Credit Rating History:

Local currency Foreign currency

23-Apr-2012 SD/-- SD/--

10-Dec-2010 B-/-- B-/--

05-Mar-2010 B+/-- B+/--



Standard & Poor’s Ratings Services’ ratings on Lupatech S.A. reflect the company’s third postponement of the annual interest payment on its second private issuance of convertible debentures initially due on April 15, 2012. Since the first postponement in April 2012, the company has postponed payments to the debenture holders in August and November, and it now expects to make the payment in February 2013.

We will continue to assign ‘SD’ (selective default) global scale and national scale ratings to Lupatech as long as the interest payments are not made or until the convertible debentures are converted in their entirety to equity during the capital strengthening plan, which would cause the defaulted instrument to cease to exist. Upon the resolution of this default, we will reevaluate the company’s credit quality, taking in consideration the new capital structure that results from its ongoing capitalization. We will also review the company’s business profile, taking into account its new backlog profile after the consolidation of its business with San Antonio Brasil Cos. (not rated), which had a backlog of about Brazilian real (R$) 1 billion as of September 2012.

The ‘CCC’ rating on the perpetual bonds reflects the company’s continued interest payment on the bonds, and its overall “weak” financial condition and liquidity position and dependence on equity infusions to honor its obligations. The next coupon payment is scheduled for January 2013, and we expect that the company will pay it with proceeds from the recapitalization.

Related Criteria And Research

-- Timeliness Of Payments: Grace Periods, Guarantees, And Use Of ‘D’ And ‘SD’ Ratings, Dec. 23, 2010

-- Understanding Standard & Poor’s Ratings Definitions, June 3, 2009

-- Rating Implications Of Exchange Offers And Similar Restructurings, May 12, 2009

-- How Standard & Poor’s Uses Its ‘CCC’ Rating, Dec. 12, 2008

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