S&P drops Autocam

Standard & Poor's said it lowered its corporate credit rating on Autocam to CC from CCC+ and placed the ratings on CreditWatch with negative implications.

The agency said it also lowered its ratings on the company's senior secured bank facilities to CC from CCC+ and the senior subordinated notes to C from CCC-, adding that these actions followed Autocam's statements, in its recent 10-Q filing with the SEC, that it may be unable to meet its Dec. 15 interest payment on its $140 million senior subordinated notes, that it is engaged in restructuring discussions with holders of its senior subordinated notes regarding a possible equity swap, that it does not expect to be in compliance with financial covenants on its senior credit facilities and second-lien credit facility as of Dec. 31 and that it is seeking to amend its senior first-lien credit facilities and its second-lien credit facility to provide covenant relief.

According to S&P, the downgrades reflect Autocam's distressed financial situation and the increasing possibility that the company will be forced to restructure in the near term.

S&P said it believes it is unlikely that the company will be able to secure alternative financing in the absence of waivers for its current covenants or incremental liquidity from its equity sponsors, because of its very high debt leverage and weak operating results.

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