S&P rates Plastech facility

Standard & Poor's said it assigned its BB- corporate credit rating to Plastech Engineered Products Inc. and assigned its senior secured BB- bank loan rating and its recovery rating of 4 to Plastech's proposed $465 million of first-priority senior secured credit facilities.

S&P also assigned its senior secured B debt rating and a recovery rating of 5 to Plastech's proposed $50 million senior second-lien bullet term loan due 2011.

S&P said the ratings on Plastech reflect the company's below-average business profile and aggressive financial policy.

Business risks arise from Plastech's exposure to the highly competitive and cyclical automotive industry and established and resourceful competitors. Plastech's revenues lack diversity, as they are concentrated in North America with four major customers.

Mitigating these concerns, plastic content per vehicle has increased in recent years and is expected to continue to increase. In addition, Plastech's products are positioned on top-selling platforms, and the company's status as a minority-owned enterprise provides the opportunity for Plastech to benefit from original equipment manufacturer minority sourcing goals. Plastech is also a party to a sourcing agreement with Johnson Controls Inc., which is a long-term contract that guarantees substantial future revenue levels to Plastech.

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