Bangkok--8 Jul--Standard & Poor's
- Private investor Graeme Hart's Rank Group (New Zealand) is forming U.S. aftermarket auto parts supplier Autoparts Holdings Ltd. (APH) through Rank's proposed purchase of the assets of Honeywell Inc.'s consumer products group.
- The proposed purchase is being funded by a $307 million common equity contribution, a $530 million first-lien term loan, and $150 million second-lien term loan.
- We are assigning our preliminary 'B+' corporate credit rating to APH and other various ratings to the proposed financings.
- The outlook on APH is stable because we believe the company will generate positive free cash flow in 2011 and that its leverage will be about 4.5x by year-end 2011.
Standard & Poor's Ratings Services said today that it assigned its preliminary 'B+' corporate credit rating to Danbury, Conn.—based Autoparts Holdings Ltd. (APH). The outlook is stable.
At the same time, we assigned our preliminary 'B+' issue rating and preliminary '3' recovery rating on the proposed senior secured first-lien credit facility, which includes a five-year $50 million first-lien revolving credit facility and a six-year $530 million first-lien term loan B. Subsidiaries Fram Group Holdings Inc., Prestone Holdings Inc., and Fram Group (Canada) Inc. are co-borrowers under the revolver. Fram Group Holdings and Prestone Holdings are co-borrowers under the first- and second-lien term loans.
We also assigned our preliminary 'B-' issue rating and preliminary '6' recovery rating to the proposed 6.5-year $150 million second-lien term loan.
"The preliminary ratings on APH reflect its fair business risk profile," said Standard & Poor's credit analyst Nancy Messer, "characterized by relatively steady revenue growth and double-digit margins, but also a concentrated customer base." They also reflect the company's highly leveraged financial risk profile with low free cash flow generation, adjusted debt leverage under 5x, and ownership by New Zealand private investor Graeme Hart's Rank Group Ltd.
RELATED CRITERIA AND RESEARCH
- North American Auto Suppliers Have Steered Profitability Above Pre-Recession Levels, But Can They Stay On Track? June 15, 2011
- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009
- Key Credit Factors: Business And Financial Risks In The Auto Component Suppliers Industry, Jan. 28, 2009
- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contacts:
Nancy C Messer, CFA, New York (1) 212-438-7672
Robert Schulz, CFA, New York (1) 212-438-7808