Market analysts have lowered the credit rating for a major injection molder, saying they are concerned about the amount of debt the business is carrying and the possibility it could default on loans. Standard & Poor's lowered Key Plastics LLC to a CCC-plus credit rating Feb. 1 from B, a two-step decrease.
The Novi, Mich.-based company listed $428 million of debt at the end of September.
Company officials did not respond to the rating report immediately.
In November, Key filed an amendment with the Securities and Exchange Commission stating it would come up with more equity to back its loans by mid-December.
Key received an extension in December to Jan. 31, but when it extended the deadline again to Feb. 15, the New York credit company stepped in with the lower ranking.
"There is an identifiable risk of default," said Standard & Poor's analyst Lisa Jenkins. "The company has not performed up to its expectations.
"We had been waiting to see what would happen. When nothing had happened [by late January], it raised some concerns on our part."
She would not comment on what the company could do to improve its rating.
Key Plastics produces a variety of automotive parts, including door handles, fuel filler doors, audio and heating and cooling components and under-the-hood parts, such as pressurized bottles.
The company was 16th in Plastics News' ranking of North American injection molders in 1998, with related sales of $279 million, and total corporate sales of $422.6 million.
Last year Key bought Foggini Group of Turin, Italy, an injection molder serving automakers throughout Europe. Foggini had $130 million in 1998 sales. At the time, Standard & Poor's rated Key as stable.
Standard & Poor's put Key Plastics on its credit watch Nov. 23.
"We view [automotive plastics supply] as a very challenging industry," Jenkins said.
"There's not a lot of room for error."
