S&P Revises Outlook on Ferro Corp. (FOE) to Developing; Ratings Affirmed

S&P Global Ratings said that it affirmed its ratings on Ferro Corp. (NYSE: FOE), including its 'BB-' corporate credit rating, and revised the rating outlook to developing from stable.

At the same time, we affirmed our 'BB-' issue-level rating on the company's senior secured debt. The recovery rating remains '3', indicating our expectation of meaningful (50% to 70%; higher half of the range) recovery in the event of payment default.

The outlook revision follows the recent announcement that Ferro Corp.'s board of directors is exploring possible strategic alternatives for the company to enhance shareholder value and that it has retained a financial advisor. The developing outlook reflects our view of the uncertainties related to the result of the strategic alternative process the company is undertaking. The outlook also reflects the chance that we could reassess the company's financial risk profile, business risk profile, or both, depending on the result of the process.

"The developing outlook reflects our belief that we could raise, lower, or affirm the ratings on Ferro Corp., depending on the outcome of the strategic alternative process the company is undertaking," said S&P Global Ratings credit analyst Brian Garcia.

We expect profitability will gradually improve in the next one to two years as a result of both cost-saving initiatives, as well as the integration of the company's recently acquired, higher-margin-generating companies. Our ratings assume that, absent a transaction, management will continue to pursue its growth initiatives, while maintaining credit measures at levels in line with a significant financial risk profile. At the current rating, we expect that the company will maintain its FFO-to-debt ratio at about 20% on a acweighted-average, sustainable basis (pro forma for acquisitions).

You May Also Be Interested In

• Jefferies Upgrades Husqvarna AB (HUSQB:SS) to Buy
• Morgan Stanley Downgrades Envista Holdings Corp. (NVST) to Equalweight
• BofA Securities Downgrades Hertz Global (HTZ) to Underperform