S&P puts Stillwater ratings on Creditwatch

NEW YORK - Standard & Poor's Ratings Services said Thursday it has placed its ratings for Stillwater Mining Co. on CreditWatch with negative implications, citing concerns about its possible loss of a contract with General Motors Corp.

The agency said the ratings included its B- corporate credit rating for the Billings, Mont.-based company.

Standard & Poor's said Stillwater's platinum group metals supply agreements with automakers GM and Ford Motor Co. include provisions that guarantee a minimum purchase price for palladium and platinum, even when prices fall below stipulated levels.

That's a benefit to Stillwater given today's relatively low prices, said Standard & Poor's credit analyst Maurice Austin.

GM has filed for bankruptcy protection, but is speeding toward a record-short escape after a judge's order approving the sale of most of its assets to a new company went into effect.

Although Stillwater expects to be able to sell the metals on the market if the GM agreement is terminated, it would lose the benefit of those pricing floors, Standard & Poor's said. The financial impact could range from $5 million to about $35 million depending on how much of the metals produced for GM can be resold on the market, it said.

The U.S. automotive industry is a key end market for Stillwater, and the weak global economy and substantially reduced U.S. demand for autos continue to impair the company's operating results, the agency said.

The auto industry — mainly Ford and GM — consumes virtually all of Stillwater's palladium production and 70 percent of its platinum production, according to Standard & Poor's.

Stillwater shares slid 2 cents to $4.90 in after-hours trading. During the regular session, the stock dropped 39 cents, or 7.3 percent, to close at $4.92.

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