S&P lowers AM General loans

Standard & Poor’s said it removed the ratings on AM General LLC from CreditWatch, where it was placed with positive implications in June.

The agency also said it affirmed the company’s CCC corporate credit rating.

The outlook is negative.

S&P also said it lowered the ratings on the company’s senior secured revolver and term loan to CCC from CCC+ and revised the recovery ratings to 3 from 2.

The 3 recovery ratings indicate 50% to 70% expected default recovery.

The ratings reflect a view that AM General could experience difficulty generating enough cash internally to meet debt-service requirements over the next 12 months, even though the company’s cash balance has been enhanced by a recent legal settlement, the agency said.

The company’s liquidity profile remains weak due to poor earnings and cash generation, uncertain demand, high borrowing costs and significant near-term debt maturities, S&P said.

AM General’s financial commitments also are vulnerable to nonpayment in the event that adverse business conditions continue, the agency said.

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