Moody's reviews Constellium for downgrade

Moody's Investors Service said it placed Constellium NV's Ba3 corporate family rating, Ba3-PD probability of default rating and Ba3 senior debt rating under review for downgrade following the company's announcement of its plan to acquire Wise Metals Intermediate Holdings LLC (B3/under review for upgrade).

The review reflects Moody's view that the planned acquisition could result in a material increase of Constellium’s debt on a pro forma basis, with a significant increase in capex for the consolidated entity in the next few years. Constellium has indicated that it will issue a mix of equity and debt to pay for the $1.4 billion acquisition consisting of $455 million in cash and about $945 million of assumed Wise debt.

Moody's also recognizes that the acquisition of Wise has a solid strategic rationale, albeit with execution risks. Post-acquisition, the enlarged Constellium group will hold a global leading position in the aluminum can sheet business and an increased market presence in the fast-growing aluminum Body in White automotive market, the agency said.

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