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Rating Action:

Moody's revises General Cable's Speculative Grade Liquidity assessment to SGL-4 following the withdrawal of its proposed senior notes

29 Sep 2014

Approximately $1.2 billion of rated debt affected

New York, September 29, 2014 -- Moody's Investors Service revised the Speculative Grade Liquidity assessment of General Cable Corporation ("General Cable") to SGL-4 from SGL-3. The revision follows General Cable's announcement that it has withdrawn the $250 senior unsecured notes offering announced on September 22, 2014 due to uncertain and weak conditions in the high yield debt market. The Corporate Family Rating of B2 and other ratings remain the same. The rating outlook is negative.

The following ratings actions were taken:

The Speculative Grade Liquidity assessment, revised to SGL-4 from SGL-3.

The following ratings remain the same:

Corporate Family Rating at B2;

Probability of Default Rating at B2-PD;

Senior Unsecured Notes due 2019 at B3 (LGD-5);

Senior Unsecured Notes due 2015 at B3 (LGD-5);

Senior Unsecured Notes due 2022 at B3 (LGD-5);

Subordinated Convertible Notes due 2029 at Caa1 (LGD-6);

The rating outlook remains negative.

RATINGS RATIONALE

The downward revision of the Speculative Grade Liquidity assessment to SGL-4 reflects uncertainty surrounding the company's near-term debt maturities and our view that the company's liquidity could be challenged over the next 12 months. Our primary concern stems from the 2015 unsecured notes maturity along with the springing maturity feature imbedded in the company's Revolving Credit Facility. The Revolving Credit Facility will automatically become due December 31, 2014 if the 2015 unsecured notes are not repaid or refinanced within 90 days of the April 2015 maturity. The springing maturity will not be applicable if there is at least $100 million of availability and the fixed charge coverage ratio is not less than 1.15 to 1.00, in each case after giving pro forma effect to the repayment of such notes.

General Cable's B2 Corporate Family Rating reflects the company's global footprint and broad wire and cable product offerings. These strengths are offset by the company's leveraged capital structure and low operating margins. Current credit metrics are consistent with the B2 CFR; however, operating weakness persists. In addition, Moody's views General Cable's commitment to its shareholders as a risk to the rating. As of LTM 2Q14, adjusted debt-to-EBITDA increased to 6.6x from 5.2x at year-end 2013. Adjusted EBITA-to-interest coverage declined to 1.3x from 1.7x and adjusted EBITA margin declined to 3.1% from 3.8% over the same time period. Operating performance during 1H2014 has been impacted by inconsistent growth in utility and infrastructure spending in North America and Latin America, as well as ongoing regional headwinds in Venezuela, Thailand, and Spain.

The negative rating outlook reflects lack of growth in key end markets, uncertain details and costs associated with the restructuring program, and the company's stated commitment to return capital to shareholders in the face of operational weakness, all of which could lead to weaker credit metrics than we are currently projecting. The negative outlook also accounts for the uncertain liquidity profile stemming from the 2015 unsecured notes maturity along with the springing maturity feature imbedded in the company's Revolving Credit Facility. The springing maturity will automatically become due December 31, 2014 if, among various requirements and thresholds, the 2015 unsecured notes are not repaid or refinanced within 90 days of the April 2015 maturity. General Cable is expected to use its credit facility to fund the upfront restructuring costs which puts additional pressure on liquidity.

The rating outlook could be returned to stable if General Cable's operating performance improves such that EBITA-to-interest expense exceeds 2.0x and debt-to-EBITDA trends below 5.0x (all ratios incorporate Moody's standard adjustments). A stable outlook would also be supported by a conservative distribution policy that is commensurate with the operating performance of the company and supports the maintenance of stable credit metrics.

Moody's indicated the ratings could be downgraded if General Cable fails to address its upcoming maturities or if its operating performance remains weak, specifically if EBITA-to-interest expense remains below 2.0x and/or debt-to-EBITDA is sustained above 5.5x (all ratios incorporate Moody's standard adjustments). Debt-financed acquisitions or significant shareholder-friendly activities, such as debt-financed dividends or large share repurchases, could also result in rating downgrades.

General Cable Corporation, headquartered in Highland Heights, KY, is a global manufacturer of copper, aluminum and fiber optic and elector power cable products from high-voltage utility lines to low-voltage residential application sockets. Primary end markets served include electrical utility, electrical infrastructure, and construction. Revenues for the 12 months ended June 27, 2014 totaled approximately $6.2 billion.

The principal methodology used in this rating was Global Manufacturing Companies published in July 2014. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Karen L Nickerson
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Glenn B Eckert
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's revises General Cable's Speculative Grade Liquidity assessment to SGL-4 following the withdrawal of its proposed senior notes
No Related Data.
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