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I AGREE
11 Apr 2011
Approximately $2.3 billion of rated debt securities affected
New York, April 11, 2011 -- Moody's Investors Service changed Manitowoc Company, Inc.'s
(Manitowoc) ratings outlook to stable from negative and assigned a Speculative
Grade Liquidity rating of SGL-3 indicating adequate liquidity.
Concurrently, Moody's affirmed the company's B2 Corporate
Family Rating (CFR) and Probability of Default Rating (PDR) as well as
the company's instrument ratings.
RATINGS RATIONALE
The change in rating outlook to stable from negative reflects the expectation
for increased sales and higher margins in both the company's food
service and crane operations in 2011. The company's food
serve operations grew by 4% in 2010. Although Manitowoc's
crane sales declined by 23.5% in 2010, this was a
significant improvement from 2009's 41% decline. For
2011, Moody's anticipates the crane operations will stabilize
further.
The affirmation of the B2 CFR and PDR considers that while Manitowoc's
leverage will likely remain at an elevated level for the rating category
for at least the next year, Moody's anticipates that the company
will generate positive free cash flow in 2011 and improve its debt coverage
ratios. A primary consideration in the ratings affirmation was
the company's track record of reducing debt during the downturn with cash
from operations and asset sales. Manitowoc's credit profile
also benefits from significant international diversification and from
sales in various emerging markets that are growing faster than its domestic
business.
The assignment of the SGL-3 rating reflects the expectation for
positive free cash flow in 2011 along with over $300 million of
anticipated revolver availability on the company's $400 million
revolver. Moody's anticipates a sufficient improvement in
the company's credit metrics in 2011 so as to allow for meaningful
room under the company's covenants.
Assignments:
..Issuer: Manitowoc Company, Inc. (The)
.... Speculative Grade Liquidity Rating,
Assigned SGL-3
Outlook Actions:
..Issuer: Manitowoc Company, Inc. (The)
....Outlook, Changed To Stable From
Negative
Adjustments:
..Issuer: Manitowoc Company, Inc. (The)
....Senior Secured Bank Credit Facility Nov
6, 2013, changed to LGD2, 21 % from LGD2,
18 %
....Senior Secured Bank Credit Facility Nov
6, 2014, changed to LGD2, 21 % from LGD2,
18 %
....Senior Secured Bank Credit Facility Nov
6, 2013, changed to LGD2, 21 % from LGD2,
18 %
....Senior Unsecured Regular Bond/Debenture
Nov 1, 2013, changed to LGD5, 75 % from LGD5,
73 %
....Senior Unsecured Regular Bond/Debenture
Feb 15, 2018, changed to LGD5, 75 % from LGD5,
73 %
....Senior Unsecured Regular Bond/Debenture
Nov 1, 2020, changed to LGD5, 75 % from LGD5,
73 %
The ratings and/or outlook could be pressured if EBITA/interest expense
or Debt to EBITDA materially weakened from current levels over the next
few quarters or if Debt to EBITDA was not on track to decline by at least
half a turn by the end of 2011. For 2010, EBITA/interest
was 1.2x while debt/EBITDA was 6.8 times as adjusted by
Moody's. The rating could also come under pressure if below-expectation
performance resulted in meaningful tightness under its covenants.
The rating outlook could be changed to positive if leverage was expected
to improve to under 5x in the next twelve months and was expected to continue
to improve. EBITA coverage of interest of over 2 times that was
deemed to be improving would also support positive ratings traction.
A meaningful rebound in the domestic construction market would also be
supportive of positive ratings action.
Moody's last rating action on Manitowoc was on October 13, 2010
when Moody's assigned a B3 rating to Manitowoc's $600 million
of senior unsecured notes. Moody's affirmed the company's B2 corporate
family rating (CFR) and probability of default rating (PDR).
The principal methodologies used in rating Manitowoc Company Inc.
were Global Manufacturing Industry published in December 2007, and
Loss Given Default for Speculative-Grade Non-Financial Companies
in the U.S., Canada and EMEA published in June 2009.
Other methodologies and factors that may have been considered in the process
of rating this issuer can also be found on Moody's website.
The Manitowoc Company, Inc., headquartered in Manitowoc,
WI, is a diversified global manufacturer supporting the construction
and foodservice end markets. Revenues for 2010 were approximately
$3.1 billion.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service information, and confidential and proprietary Moody's
Analytics information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
New York
Paul Aran
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
J. Bruce Clark
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's affirms Manitowoc CFR at B2; outlook changed to stable from negative
No Related Data.
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