Bar Technologies Inc., which operates a steel mill in Lackawanna, has had the outlook on its debt upgraded to stable from the old rating of negative by Standard & Poor's Corp., the debt rating agency said Monday.
S&P maintained its triple C-plus rating on BarTech's corporate credit and its triple C rating on its senior secured debt. A triple C rating means a company's debt is risky and has been identified as being vulnerable to default.
S&P said BarTech's outlook improved after its two major shareholders, Blackstone Capital Partners II Merchant Banking Fund and Veritas Capital Inc., made an additional $30 million equity investment in the firm.
Those proceeds were used to reduced its bank debt. BarTech's bank group also has made a commitment to add $15 million to the company's existing credit line.
Although the moves give BarTech more financial flexibility, S&P said it still is uncertain whether its owners will be willing to provide further financial support.
BarTech also has encountered "numerous operating problems" at its steelmaking facilities in Lackawanna and Johnstown, Pa., S&P said.
In response, BarTech announced earlier this month that it plans to spend $30 million over the next 18 months to two years at its facilities.
The company plans to spend $14 million to install a new electrical control system at its 13-inch bar mill in Lackawanna. BarTech also plans to make improvements at the bar mill that should reduce bottlenecks and boost the mill's capacity to about 720,000 tons from its current peak output of about 560,000 tons.
The improvements at the Johnstown plant will allow BarTech, which S&P said faces difficult market conditions for its main product lines, to produce leaded steel.
BarTech, which has $132 million in long-term debt, had its losses widen during the first half of this year to $22.5 million from $19.2 million a year ago. The company's sales nearly tripled to $115.5 million from $40 million the year before.