American Axle and Manufacturing Inc. (AXL) has announced that its wholly-owned subsidiary, American Axle & Manufacturing, Inc. (“AAM”), is planning a public offering of senior notes. The company subsequently declared the pricing of $550 million of 6.625% senior notes due in 2022 at an issue price of 100% in public offering subject to customary closing conditions.
The proceeds from this offering will be utilized in the purchase of all of the company’s 5.25% senior notes due in 2014, including the payment of accrued interest and any related early tender premium. The remaining amount will be utilized in partial redemption of its 5.25% senior notes due in 2014, payment of pension obligations and in other general corporate purposes.
Standard & Poor's Ratings Services has assigned a 'B' rating to the proposed $550 million senior notes offering. It has also conferred a recovery rating of '6' rating as it expects that lenders would receive around 0% to 10% recovery of the principal amount in case of a default. However, the rating service has downgraded the issue-level rating on the company's $425 million 9.25% senior secured notes due in 2017 to 'BB' from 'BB+' and revised the recovery rating to '2' from '1'.
Fitch Ratings has reaffirmed the 'B+' rating to Issuer Default Ratings (IDRs) of American Axle and AAM. It has also allocated 'B-/RR6' rating to American Axle’s proposed $550 million senior notes offering. The rating service has affirmed 'BB+/RR1' ratings on AAM's $438 million secured revolving credit facility and $383 million of senior secured notes and 'B-/RR6' ratings on $1.3 billion senior unsecured notes.
American Axle is a leading supplier of driveline systems, modules and components for the light vehicle market. The company makes axles, driveshafts and chassis components for light trucks, sport utility vehicles and passenger cars. It supplies driveline systems and other components to General Motors Company (GM), Chrysler, PACCAR Inc. (PCAR), Ford Motor Co. (F), Volvo and various other OEMs.
American Axle retains a Zacks #3 Rank on its shares, which translates into a short term (1-3 months) Hold rating. We have a long term (more than 6 months) Neutral recommendation on the stock.
AMER AXLE & MFG (AXL): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
PACCAR INC (PCAR): Free Stock Analysis Report
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