Standard & Poor“s said it lowered its corporate credit and senior unsecured debt ratings for Diamond Triumph Auto Glass Inc. to single-B from single-B-plus. The ratings are removed from CreditWatch, …
Standard & Poor“s said it lowered its corporate credit and senior unsecured debt ratings for Diamond Triumph Auto Glass Inc. to single-B from single-B-plus. The ratings are removed from CreditWatch, where they were placed with negative implications on November 30, 1999. The rating agency said current rating outlook is negative. The rating actions reflect Diamond“s weaker-than-expected financial performance over the past year and S&P expectation that debt protection measures will remain below previously expected levels over the near-to-intermediate term. The decline in operating results is of particular concern given Diamond“s high leverage. The company“s aggressive capital structure reflects the recapitalization that Diamond completed in 1998. Adjusted debt to EBITDA, which had been expected to decline to the 4 times (x) area, has instead increased, and is presently about 6x. Adjusted funds from operations to debt is about 8%, compared with 13% in 1998. Although Diamond scaled back its growth initiatives as a result of its recent industry pressures, no significant reduction in debt leverage is expected over the next year or two due to continuing competitive pressures, the rating agency said. Difficult industry fundamentals are likely to preclude a significant improvement in operating results over the near term. Any deterioration in operating results could lead to further downgrades, S&P said.