Ryerson, backed by Platinum Equity, upgraded at S&P

  • Platinum Equity owns controlling stake
  • Steel distribution company’s debt multiple dips
  • Ryerson sells debt to qualified institutional buyers


Ryerson Holding Corp drew an upgrade from Standard & Poor’s Rating Service after the publicly traded aluminum and steel distributor, which is backed by Platinum Equity LLC, set plans to float $650 million in senior debt.

Ryerson improved its credit metrics by reducing its overall debt load and hammering out an increase in Ebitda of late, according to S&P.

Analyst William Ferara lifted the outlook on Ryerson Holding to positive from stable. The company’s debt-to-Ebitda multiple is expected to fall to about 6x; the analyst earlier had forecast 7x to 8x.

“Demand from Ryerson’s various end markets will gradually improve in the next 12 months based on healthier general macroeconomic growth,” Ferara said in a note to clients.

On the other hand, the company remains subject to competition from imports, particularly in stainless plate and flat-rolled products, he said.

Ryerson said on May 12 that it would sell $650 million of senior secured notes due 2022 in a private offering to qualified institutional buyers.

S&P rated the new debt B-minus, which means speculative and subject to substantial credit risk, according to the firm’s ratings definitions. The deal is expected to close on May 24.

The Chicago company plans to use the proceeds to reduce its roughly $570 million in senior secured debt due 2017 and $145 million in senior unsecured debt due 2018.

Ebitda up, revenue off

Ryerson said May 5 that its first-quarter adjusted Ebitda rose 8.6 percent to $52 million from $47.9 million in the year-earlier period. Revenue dropped 19 percent to $702.6 million.

“We gained market share, effectively managed expenses and working capital, reduced debt and posted strong earnings,” the company said. “Ryerson is well positioned to capitalize on improvements in the pricing environment as they unfold.”

Overall, debt upgrades have been rare among sponsor-backed companies. From May 6 through May 15, 11 portfolio companies drew downgrades from either S&P or Moody’s, with only three upgrades during the period, according to rating actions compiled by Buyouts.

Platinum Equity, the Beverly Hills, California, PE firm, owns 21 million Ryerson common shares with a market value of about $248 million, according to filings. The stock price hit a trough in January below $4 a share and has roughly tripled since then.

Tom Gores, whose net worth is listed at $3.3 billion by Forbes as of May 17, 2016, launched Platinum in 1995. His brother, Alec Gores, heads Gores Group. As of March 11, 2016, Platinum managed about $5.7 billion of assets, according to the firm’s Form ADV.

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