February 3, 2003-- Home Textiles Today,
S&P may downgrade Cone Mills debt
Standard & Poor's Rating Services, one of the big three corporate credit agencies, said it may cut its ratings on Cone Mills Corp. and has put the textiles producer on "CreditWatch with negative implications."
Cone Mills' long-term corporate credit and senior secured debt are currently rated "CCC+". As of Sept. 29, Cone had about $155.2 million in outstanding debt.
Cone is the nation's largest producer of denim fabrics used in producing jeans and is involved in the home furnishings market as North America's largest commission printer of decorative fabrics for other textiles producers in the drapery and upholstery trade. As part of an earlier restructuring, Cone sold off its John Wolf decorative fabrics business in August 2001.
S&P said the placement on CreditWatch "reflects Cone Mills' plan to ask bondholders to exchange $100 million in notes due March 15, 2005, for new notes, extending the maturity and amending some of the terms." Although the proposed terms were not publicly disclosed, S&P analyst Susan Ding said she "expects that Cone Mills may not be able to meet all of its obligations as originally promised under the note issue and fund its Mexican expansion strategy at the same time."
S&P said the exchange was contemplated "as part of Cone Mills' overall plan to recapitalize its balance sheet, and it gives current common stockholders the right to purchase up to $27.0 million of convertible notes, which will bear interest at 12 percent per year and be convertible into common stock at $1.00 per share."
S&P said it "will monitor the situation for additional information and details to evaluate the financial impact on the company and its debt holders."
Yearend slowdown didn't hurt remodelers' year
Americans remodeled their homes at a slower pace at the end of 2002, as anxious homeowners put off additions and improvements in response to mounting fears of war and weaker economic conditions, the National Association of Home Builders (NAHB) said in its Remodeling Market Index (RMI).
"Remodelers reported a fairly weak amount of activity near the end of what was overall a very strong year for home improvements, said Bill Owens, chairman of the NAHB Remodelers' Council. "Some of the decline was undoubtedly due to owners' decisions to delay property improvements in light of economic jitters."
But the slowdown isn't necessarily anomalous, he added. "It's not unusual for fewer remodeling jobs to be getting under way in the winter months and during the holidays. What's encouraging is that the vast majority surveyed for the RMI are expecting solid dollar volumes and profit margins in 2003."
The RMI is based on a quarterly survey of more than 600 professional remodelers and consists of two separate indices. The first gauges current market conditions, and the second assays near-term expectations, in part based on order backlogs for the next three months. Both indices fell substantially during the fourth quarter, compared with the prior three months, but slipped only slightly on a year-over-year basis.
The index for current conditions rested at 43.2, down 6.6 points from the third quarter, but off less than two points from a reading of 45.0 at the end of 2001. The index of future expectations was down slightly to 39.1 from a third-quarter reading of 48.2. But on a year-over-year basis, the index was down less than four points from its yearend reading of 42.8.
"Remodelers reported the exact same level of maintenance and repair work on homes and apartments in the final quarter of 2002 as they did at yearend 2001," said the NAHB. "This indicates there's a baseline of activity when it comes to essential work that owners commission to keep their homes and apartments functioning properly even as they postpone the more discretionary improvements and additions."
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