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5 年前
TEXT-S&P rates New Enterprise Stone & Lime notes 'B-'
2012年2月29日 / 下午5点54分 / 5 年前

TEXT-S&P rates New Enterprise Stone & Lime notes 'B-'

Overview	
     -- U.S. aggregates and road construction company New Enterprise Stone & 	
Lime has launched $250 million in new senior secured notes and a new $170 	
million asset-based revolving credit facility due 2017 to refinance its 	
existing bank loans and revolving credit facility.	
     -- We are assigning our 'B-' issue-level rating and '3' recovery rating 	
to the new proposed notes and placing all our ratings on New Enterprise on 	
CreditWatch with negative implications pending the outcome of the company's 	
refinancing plans.	
     -- If the transaction is completed as proposed, we would likely affirm 	
the 'B-' corporate credit rating and issue-level rating on the new notes and, 	
at the same time, lower the rating on the company's existing $250 million 11% 	
senior unsecured notes to 'CCC' from 'B-'.	
     -- If the planned transaction does not close, we are likely to lower the 	
corporate credit rating to 'CCC' from 'B-' to reflect constrained liquidity 	
given the existing lack of cushion under bank covenants, as well as the 	
maturity if the company's existing revolving credit facility in less than one 	
year.	
	
Rating Action	
On Feb. 29, 2012, Standard & Poor's Ratings Services placed its ratings on 	
Pennsylvania--based New Enterprise Stone & Lime Co. Inc., including our 'B-' 	
corporate credit rating, on CreditWatch with negative implications. 	
	
At the same time, we assigned a 'B-' issue-level rating to the proposed $250 	
million of senior secured notes due 2018 with a recovery rating of '3', 	
indicating that lenders could expect meaningful (50% to 70%) recovery of 	
principal in the event of a default.	
	
Rationale	
The CreditWatch listing follows New Enterprise's announcement that it plans to 	
enter into a new $170 million asset-based revolving credit facility due 2017 	
and also issue $250 million of 13% senior secured notes due 2018.	
	
Based on our initial analysis, we have determined that if the transaction is 	
completed as currently proposed, we would affirm our 'B-' corporate credit 	
rating following the closing of the transaction. We would also lower the 	
rating on the company's $250 million 11% senior unsecured notes due 2018 to 	
'CCC' from 'B-', given the increased amount of senior obligations, which would 	
reduce recovery prospects for this issue. The rating and stable outlook would 	
reflect the fact that the company would not have any significant maturities 	
until 2017, when its asset-based lending facility matures. In addition, we are 	
projecting that the company will maintain "adequate" liquidity (as defined by 	
our criteria) during this period, given projected availability under its new 	
credit line and the lack of financial ratio covenant requirements in the 	
proposed capital structure. 	
	
However, should the proposed transaction fail to close, it is likely that we 	
would lower the corporate credit rating to 'CCC' from 'B-', given the 	
likelihood of constrained liquidity due to lack of cushion under financial 	
ratio covenants in the existing bank term loan credit agreements. The lower 	
rating would also reflect heightened refinancing risk associated with the 	
maturity of the existing revolving credit facility in less than one year in 	
January 2013.	
	
CreditWatch	
In resolving the CreditWatch listing, we will monitor New Enterprise's 	
progress in completing the proposed transaction. If the company successfully 	
refinances its bank debt and closes on its new revolving credit facilities, we 	
would likely affirm our current 'B-' corporate credit rating as described 	
above. If the transaction is not completed as planned, we would likely lower 	
corporate credit and issue-level ratings to the 'CCC' category.	
	
Related Criteria And Research	
     -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011	
     -- Key Credit Factors: Business And Financial Risks In The Global 	
Building Products And Materials Industry, Nov. 19, 2008. 	
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008.	
	
Ratings List	
	
Ratings Placed On CreditWatch	
                                        To                 From	
New Enterprise Stone & Lime Co. Inc.	
 Corporate Credit Rating                B-/Watch Neg/--    B-/Negative/--	
 Senior Unsecured                       B-/Watch Neg       B-	
   Recovery Rating                      4                  4	
	
New Ratings	
	
New Enterprise Stone & Lime Co. Inc.	
 Senior Secured                  	
  US$250 mil 12.% sr secd nts due 2018  B-                 	
   Recovery Rating                      3                  	
	
	
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.

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