S&P downgrades Stillwater Mining

Standard & Poor's said it lowered Stillwater Mining Co.'s corporate credit rating to B+ from BB-, senior secured debt rating to BB- from BB and its unsecured debt rating to B- from B. The outlook is negative.

S&P said the downgrade primarily reflects Stillwater's continued inability to improve operating performance, concerns about Stillwater's ability to generate positive free cash flow in light of weak palladium prices and the depletion of palladium inventory in the first quarter of 2006 and credit concerns related to its largest customers, General Motors Corp. (B/negative/B-3) and Ford Motor Co. (BB-/negative/B-2).

The ratings on Stillwater Mining reflect its very limited operating diversity, high-cost profile and some exposure to volatile metal prices, the agency said. The ratings also reflect favorable supply contracts, good credit metrics and moderate financial leverage. Debt to last-12-month EBITDA was 2.4x at Dec. 31.

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