(Media release provided by Moody's Investors Service)
NEW YORK, FEB 17 - Moody's Investors Service assigned a B1 rating to Collins & Aikman Products Co.'s ("C&A") new guaranteed senior secured A-1 term loan, added by amendment to the company's existing credit agreement dated as of December 20, 2001. This new term loan partially refinanced the company's existing term loans A and B, in forward order of maturity.
Moody's additionally confirmed C&A's SGL-3 speculative grade liquidity rating after incorporating the fact that the new $185 million A-1 term loan would defer until December 31, 2005 a like amount of principal amortization otherwise scheduled during March 31, 2004 through June 30, 2005. All of the company's existing debt ratings and its negative rating outlook remain unchanged. The following specific rating actions were taken:
- Assignment of B1 rating to C&A's $185 million guaranteed senior secured A-1 term loan due December 31, 2005, which will refinance a like portion of the existing term loans A and B, in forward order of maturity;
- Confirmation of C&A's SGL-3 speculative grade liquidity rating
The B1 rating assigned to the new guaranteed senior secured A-1 term loan facility is consistent with the ratings of the company's existing facilities under the same credit agreement. The new guaranteed senior secured credit facility is guaranteed and secured equally and ratably with the other credit facilities under the existing credit agreement. An amendment to the existing credit agreement was required to permit the application of term loan A-1 proceeds against existing term loans A and B in forward order of maturity. The reallocation of a portion of the existing term debt to the A-1 term loan served to reduce the interest margin and additionally push out scheduled principal amortization during the next year-and-a-half, to December 31, 2005.
The existing term loan A and term loan B were otherwise scheduled to amortize principal in the amounts of approximately $10 million and $71 million, respectively, during each quarter of 2005. All of the company's existing guaranteed senior secured credit facilities will notably still become current obligations on December 31, 2004, and mature on December 31, 2005. The new term facility has a lower applicable interest rate margin than the existing term facilities that were partially refinanced.
The confirmation of C&A's SGL-3 speculative grade liquidity rating reflects Moody's evaluation that the increased availability provided by the extension of principal maturities is a favorable development, but is not sufficient to raise our overall evaluation of the company's liquidity from "adequate," to "good." While recent news regarding C&A has been more favorable with regard to new business awards, the execution of restructuring savings, and increased available liquidity, Moody's will look to receive the audited 2003 results and an updated management plan with detailed assumptions before possibly reevaluating the company's negative rating outlook.
Collins & Aikman Corporation, headquartered in Troy, Michigan, is a leading global designer, engineer, and manufacturer of automotive interior components, including instrument panels; fully assembled cockpit modules; floor and acoustic systems; automotive fabric; interior trim; and convertible top systems. The company has content on approximately 90% of all North American light vehicle platforms. Annual revenues approximate $4 billion.