WCI Trips Covenant; Dade Behring Tests Positive

  • 01 Jun 2003
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WCI Steel has violated a covenant under its $100 million credit facility, leading the company to pursue a financial restructuring. Accordingly, Moody's Investors Service has downgraded the ratings assigned to WCI Steel and its holding company, Renco Steel Holdings. WCI's bank debt rating was lowered from B2 to B3. The bank loan rating reflects the value of the receivables and inventory that secure the credit line, of which about $40 million is drawn.

The company is in discussions with its financial advisors and lenders. Congress Financial Corp. is the agent on the bank loan. The restructuring efforts include a reduction of the principal amount of WCI's $300 million, 10% senior notes. The company will also look to revise a labor agreement with the United Steelworkers of America. Moreover, the Renco Group, WCI's parent company, will inject the company with a significant cash infusion that is required to complete the restructuring, if other elements of the plan are completed.

Continued idled capacity, lower prices, and higher energy and raw material costs plague the company's outlook, despite shipments and prices for steel improving in the second half of 2002. In the long-term, WCI must face the challenges of competition from lower cost, niche flat-rolled steel producers--particularly International Steel Group--increased pension funding and retiree healthcare costs, as well as the ramifications of a potentially costly blast furnace reline. Calls to John Jacunski, v.p. finance and cfo, were not returned by press time.

* Standard & Poor's has revised the outlook for Dade Behring, a producer of clinical diagnostic systems, to positive from stable as the company has presented promising improvements since its emergence from bankruptcy last fall. Dade's senior secured debt, which includes the company's $125 million revolver and $450 million term loan, is rated B+. An acquisition-related debt burden led the company to pursue a pre-packaged bankruptcy last summer. Dade now has total debt-to-EBITDA multiples of 3.3 times. There are no longer concerns that Dade's customers will jump ship due to the uncertainty of Dade's ultimate fate, according to S&P. A spokeswoman said the company is pleased with the change in outlook.


Other Ratings Actions*
American Financial GroupBaa3Under Review for DowngradeMoody's
AutoZoneBBB+Revised to Stable from PositiveS&P
Shoppers Drug Mart Corp.Baa3Upgraded from Ba1Moody's
*Thurs, May 22 through Wed, May 28
  • 01 Jun 2003

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 2,007 6 18.96
2 BNP Paribas 1,434 4 13.55
3 Goldman Sachs 1,392 3 13.15
4 Barclays 1,097 2 10.37
5 Morgan Stanley 1,094 2 10.34

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 18,228.90 62 10.55%
2 JPMorgan 17,535.24 47 10.14%
3 Wells Fargo Securities 16,128.82 45 9.33%
4 Bank of America Merrill Lynch 15,717.90 52 9.09%
5 Barclays 12,370.12 42 7.16%