(The following statement was released by the rating agency)
NEW YORK, Oct 27 - Standard & Poor's Ratings Services said today that it assigned its 'B' corporate credit rating to Troy, Mich.-based Oxford Automotive Inc. At the same time, Standard & Poor's assigned its 'CCC+' rating to the company's proposed $280 million senior secured second lien notes due 2010, which are being issued under SEC Rule 144A with registration rights.
The proposed $280 million senior secured notes, when issued, will be senior to any future subordinated debt. Standard & Poor's rating on the senior secured notes incorporates the fact that the noteholders will have a second lien on the company's domestic assets. Thus the noteholders are subordinate, both to the credit facility lenders and also to the priority obligations of the non-guarantor subsidiaries. Non-guarantor subsidiaries, mostly in Europe where the company has substantial operations, represent a significant portion of the company's total assets and a majority of the company's EBITDA. Proceeds from the transaction will be used to refinance existing debt, to refinance and terminate the company's existing Mexican synthetic lease facility, and for general corporate purposes.
In addition, the ratings assume that the company will install a $60 million new senior secured bank facility in the near-term and that the facility will be vertically undrawn. The outlook is stable.
Oxford, a tier-one supplier of specialized metal-formed systems, modules, and assemblies, had about $284 million of debt outstanding at June 30, 2003.
Oxford emerged from bankruptcy protection in July 2002 and has since been focusing on improving its operations, winning new business awards, increasing plant utilization, and outsourcing noncore components. It is expected that over time the company's operating margins should reach the low double digits because of these efforts.
"Oxford's near-term financial risk is substantially tied to the successful launch of the new Mercedes M-class and Grand Sports Tourer vehicle programs, which are expected to be launched over the next 15 months, and its ability to fund these programs, including any delays, while maintaining sufficient financial flexibility," said Standard & Poor's credit analyst Eric Ballantine. 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 Credit Ratings Actions.