Real Industry Inc. Ratings Lowered To #CCC+#, Debt Ratings Also All Ratings Placed On CreditWatch Negative

Stocks and Financial Services Press Releases Wednesday November 15, 2017 09:00
NEW YORK--15 Nov--S&P Global Ratings

NEW YORK (S&P Global Ratings) Nov. 14, 2017--S&P Global Ratings today lowered its corporate rating on Sherman Oaks, Calif.-based Real Industry Inc. to 'CCC+' from 'B' and placed the rating on CreditWatch with negative implications.

We assigned an issue-level rating of 'B' to the company's ABL due 2022 borrowed by Real Alloy Holding, Inc. and Real Alloy Canada LTD. We also lowered our issue-level rating on the company's senior secured notes due 2019 to 'CCC+' from 'B' and placed the ratings on CreditWatch with negative implications. Our '1' recovery rating on the company's ABL facility reflects our expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of a payment default. The '3' recovery rating on the company's senior secured notes reflects our expectation for meaningful (50%-70%; rounded estimate 50%) recovery in the event of a payment default.

The downgrade reflects our view that Real Industry is producing poor credit metrics and weak cash flow, and its upcoming maturities represent an overarching credit concern if not refinanced in the next two to three quarters. The company stated in its 10-Q that there is a substantial doubt about its ability to continue as a going concern, especially if it is unable to refinance its senior secured notes.

We are placing our ratings on CreditWatch with negative implications because we could lower our corporate credit rating on Real Industry to 'CCC' over the next 90 days if it does not refinance its senior secured notes due January 2019.

The CreditWatch listing indicates an increased risk of a downgrade. We will resolve our CreditWatch within 90 days, at which time we will lower or affirm the ratings.

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