S&P upgrades Dan River
April 28, 2003-- Home Textiles Today,
Dan River's corporate debt rating was upgraded by Standard & Poor's, one of the big three corporate rating agencies, after the textiles producer refinanced its debt, pushing out the maturity and avoiding a near-term cash crunch.
S&P said it boosted Dan River's corporate credit rating to "B+" from a "B-" rating, and also removed the company from its CreditWatch list, where it was placed last March.
At the same time, S&P assigned a "B-" rating to Dan River's new 12.75 percent notes due in 2009. "The notes are rated two notches below the corporate credit rating, reflecting their junior position relative to the significant amount of secured bank debt," said the credit agency.
S&P said the upgrade reflects its expectation "that Dan River's improved financial performance in 2002 will be sustained," said credit analyst Susan Ding. "The company's credit protection measures have strengthened, reflecting its improved inventory controls and asset utilization."
Cash-flow interest coverage stood at 2.9 times last year, compared with 1.3 times in 2001, said S&P. And, Dan River's operating margin — operating profits measured as a percentage of sales — more than doubled, improving to 13.7 percent from 6.7 percent the preceding year.
S&P said the company's outlook is "stable," reflecting the rating agency's "expectation that Dan River can maintain its current credit protection measures and operating performance in the intermediate term."
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