S&P cuts Intermet, loan to CCC

Standard & Poor's said it lowered its corporate credit and senior secured bank loan credit ratings on Intermet Corp. to CCC from B+ and its senior unsecured debt rating to CCC- from B.

At the same time, S&P placed the ratings on CreditWatch with negative implications.

S&P said the rating actions follow Intermet's announcement of its potential to default on its financial covenants at the end of its third fiscal quarter and, hence, have no access to its revolving credit facility.

The ratings downgrade reflects heightened concerns over Intermet's prospects of operating as an ongoing concern, given its inability to absorb the impact of raw material price increases, S&P said. The company has announced a projected net loss for the nine months ended Sept. 30 ranging between $33 million and $38 million due to a raw material costs increase of $24 million higher than the prior year. As a result of these losses, Intermet will not be in compliance with its financial covenants at Sept. 30 and is in the process of seeking a waiver from its lenders.

S&P said that if the company is not granted a waiver and does not receive access to its revolving credit facility, the company could enter into bankruptcy proceedings or a financial restructuring.

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