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S&P rates $575 million in bonds as junk

PORTLAND — The Standard & Poor's Ratings Services assigned junk status to $575 million in bonds that Jeld-Wen is trying to sell as a prerequisite for an $864 million infusion from a Toronto private equity firm.

Oregon's largest privately held company proposes $575 million in senior secured notes due in 2018, with interest rates to be determined at auction. The Klamath Falls-based window and door maker aims to sell the bonds for refinancing debt in tough market conditions, The Oregonian reported Tuesday.

S&P assigned a preliminary CCC-plus rating to the bonds. Overall, S&P gives the company a B-minus preliminary corporate-credit rating because of highly leveraged financial risk, large debt and relatively modest cash flow.

"The ratings ... reflect what we consider to be the company's weak business risk profile," S&P wrote, "as Jeld-Wen is highly dependent on the currently depressed residential construction and remodeling end markets, has thin operating profit margins and operates in highly competitive markets."

Jeld-Wen sealed a deal with Toronto-based Onex Corp. three months ago to preserve local control of the company built by Chief Executive Rod Wendt's late father, co-founder Dick Wendt. Last week, Jeld-Wen announced a revamped agreement that would give Onex a majority stake.

Jeld-Wen has 20,000 employees worldwide, with 2,500 in Oregon. It had $3 billion in revenue last year.

S&P credit analyst Thomas Nadramia, who analyzed Jeld-Wen, expects the company's rating to be stable as the company maintains adequate liquidity during a "challenging operating environment" in the next several quarters.

But he expects Jeld-Wen's window and door products to "continue to face difficulties over the next several quarters as housing and remodeling markets remain at weak levels."

S&P acknowledges, however, that Jeld-Wen maintains a leading position in residential doors in North America, Europe and Australia. The company has good geographic diversity, according to S&P, receiving more than half its revenues and profits from outside the United States.