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S&P revises Novelis outlook to negative
S&P said it changed its outlook for Novelis Inc. to negative from stable and affirmed all its ratings, including the BB senior unsecured rating.
Novelis announced that estimated capital costs to build its new Bay Minette plant have increased to $4.1 billion, about 65% higher than the company's original estimate of $2.5 billion.
“We believe the higher capital spend will markedly increase the company's FOCF deficits, which we assume it will fund from debt financing. We estimate the company has already spent 15%-20% of the total project costs, and expect the bulk of the remaining construction spending to occur in fiscal 2025 (fiscal year ends March 31) and 2026. We estimate the company will incur a cumulative FOCF deficit of $2.5 billion-$3 billion over this period, that it will primarily fund with incremental debt,” S&P said in a statement.
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