AM General S&P Ratings Unchanged

Standard & Poor's Rating Services said today that its ratings on AM General "are unchanged following the U.S. Army's decision to award the Joint Light Tactical Vehicle (JLTV) contract."

On Tuesday, the Army awarded the multibillion-dollar contract to Oshkosh.

"Although the loss of the JLTV contract will not have a material impact on AM General's near-term sales or earnings, it would have provided the company with a large, stable source of demand as the program could be worth up to $30 billion over the next 25 years," S&P wrote in its announcement. "However, AM General's liquidity remains very weak and the company has relied on support from its sponsor, MacAndrews & Forbes, to service its debt and remain in compliance with its bank covenants over the past year.

"We believe that the loss of this contract could increase the chance that the company will undergo a distressed exchange or payment default, especially if MacAndrews & Forbes withdraws its support, but we do not believe that a default is inevitable in the next six months," S&P added.