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TEXT-S&P assigns Autocam 'B+' corporate credit rating

(The following statement was released by the rating agency)

NEW YORK, May 18 - Standard & Poor's Ratings Services said today that it assigned its 'B+' corporate credit rating to Kentwood, Mich.-based Autocam Corp. At the same time, Standard & Poor's assigned its 'B+' senior secured bank loan rating and '4' recovery rating to Autocam's proposed $167.5 million of senior secured credit facilities. The debt rating and recovery rating indicate the likelihood of a marginal recovery of principal (25%-50%) in a default or bankruptcy, based on an assessment of the company's enterprise value.

The senior credit facilities consist of a $50 million multi-currency revolving credit facility due 2009, a $75 million euro-denominated term loan due 2011, and a $42.5 million U.S. term loan due 2011. The borrowers are Autocam Corp. (U.S.) and Autocam France SARL. Standard & Poor's also assigned its 'B-' debt rating to Autocam's proposed $140 million unsecured senior subordinated notes due 2014.

Proceeds from the transaction will be used, in part, to finance the acquisition of Autocam by unrated GS Capital Partners 2000 LP and Transportation Resource Partners LP. The proceeds also will be used to refinance or retire virtually all existing debt and redeem all preferred stock, to provide working capital financing, and general corporate purposes. Pro forma total debt outstanding at close of the transaction will be about $266 million.

"Upside rating potential is limited by the company's high debt leverage in combination with its relatively narrow scope of business in a highly competitive and cyclical industry," said Standard & Poor's credit analyst Nancy Messer. "Downside rating movement is limited by the company's stable operating margins and our expectation that free cash flow generation will support debt reduction in the intermediate term."

The credit facilities will be secured by a first-priority security interest in substantially all the assets of Autocam and its domestic and foreign subsidiaries (foreign operating subsidiaries are not pledging assets directly). In addition, the senior facilities will be secured by a first-priority security interest in 100% of the capital stock of Autocam and each domestic subsidiary, 65% of the capital stock of each foreign subsidiary, and all inter-company debt. Guarantors are each of the U.S. borrower's existing and subsequently acquired or organized domestic material subsidiaries and any parent holding companies of the U.S. borrower. There is no borrowing base to limit availability.

Because the French assets are not being pledged directly as security, an inter-company loan from the French holding company to the French operating subsidiaries will be established, with this loan secured by the assets of the two subsidiaries. The inter-company loan will be pledged to the benefit of the U.S. credit facility lenders. Upstream guaranties are not available from the French entity to the U.S. parent. At Dec. 31, 2003, Autocam's assets were distributed as follows: 45% France, 51% U.S., and 4% South America.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find Ratings, then Credit Ratings Search.