As usual, we have a week’s worth of ratings actions (mostly downgrades) on the debt of LBO-backed companies from ratings agencies S&P and Moody’s.
This week brought some good news from the debt raters. S&P sees encouragement in the performance of Dana Holding Corp., the giant auto parts maker that Centerbridge bought out of bankruptcy. Meanwhile Moody’s feels comfortable enough about the performance of Bain Capital’s Sensata Technologies B.V. to upgrade the company’s ratings. The ratings agencies served up two more downgrades as well, for companies owned by Kohlberg & Co., Versa Capital Management, Apax Partners and Trimaran Capital Partners.
Company: Dana Holding Corp.
Sponsor: Centerbridge Capital Partners LP
Action: S&P raised its corporate credit rating on Dana to ‘B’ from ‘B-‘ and raised the debt ratings. The outlook is stable.
Highlight: “Dana’s earnings and cash flow for the third quarter were better than we expected, reflecting benefits from aggressive restructuring actions after emerging from Chapter 11 in early 2008, despite weak auto sales. In addition, Dana reduced debt by $254 million in the first nine months of 2009 through a Dutch auction, market purchases of debt, and raising funds through a common equity offering. As a result, the company’s covenant cushion has improved.”
Company: Sensata Technologies B.V.
Sponsor: Bain Capital
Action: Moody’s has upgraded the company’s corporate family and probability of default ratings to Caa1 from Caa2, as well as the company’s senior secured credit facility to B2, senior unsecured notes to Caa2, and senior subordinated notes to Caa3.
Highlight: “The upgrade of the company’s CFR to Caa1 reflects the recent improvement in the company’s operating and financial performance. The positive ratings outlook reflects the anticipation for continued improvement in Sensata’s credit metrics as well as an expectation that the company’s covenant cushion will improve over the next 12-18 months.”
Company: Norcraft Companies
Sponsor: Apax Partners and Trimaran Capital Partners
Action: Moody’s lowered the rating of the proposed 10.5% second priority senior secured notes due 2015 issued by the company to B2 from B1 and its 9.0% senior subordinated notes due 2011 to Caa1 from B3.
Highlight: The company’s B2 Corporate Family Rating incorporates Moody’s view that Norcraft will be impacted by uncertainties in new home construction and residential repair and remodeling end markets, the main drivers of its revenues. Additionally, the rating also reflects weak credit metrics over the near term. However, Moody’s recognizes the company’s solid operating margins and its sound business model as a provider of cabinets across all price points.
Company: Central Parking Corp.
Sponsor: Kohlberg & Co., Versa Capital Management
Action: S&P lowered all its ratings on the company, including the corporate credit rating to ‘CCC’ from ‘B-‘.
Highlight: “The ratings on CPC reflect uncertainty surrounding future liquidity, the company’s narrow business focus, very high leverage, and weak performance partly due to reduced parking demand. CPC has the leading, albeit declining, position in the highly fragmented and competitive parking industry.”