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Wolverine debt eyed by S&P

By Eric Fleischauer
eric@decaturdaily.com · 340-2435

A massive stock issuance by Wolverine Tube that raised $28 million was not enough to alleviate concerns by Standard & Poor’s Rating Service.

S&P affirmed Wolverine Tube Inc.’s ratings, including its “CC” corporate credit rating with a developing outlook. S&P also removed it from “positive watch,” citing heightened uncertainty regarding the company’s ability to meet the August 2008 maturity of its 7.4 percent senior notes despite the recent capital contributions.

On Oct. 31, Wolverine ended a rights offering in which shareholders purchased 25.4 million shares of common stock, resulting in gross proceeds of $28 million.

S&P placed the copper-tube maker, which recently announced it will close its Decatur plant Jan. 6, on positive watch in February, following Wolverine’s announcement of a planned capital contribution by new owners and the stock issuance.

The company has said if it cannot meet the 2008 maturity date, a company recapitalization is possible. Total debt, adjusted for operating leases and pension obligations, was about $360 million as of Sept. 30, S&P said.

S&P said it could lower the ratings if the company is unable to make progress in refinancing its upcoming maturity, while higher ratings would depend upon Wolverine successfully exchanging or refinancing the notes and showing a sustained improvement in operating performance.

The rights offering gave existing shareholders the right to purchase additional shares at $1.10 per share. Wolverine shares closed Thursday at $1.08.

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