Dan River downgraded
Staff Staff -- Home Textiles Today, October 27, 2003
Reacting to Dan River's pre-announcement of a 30 percent slide in third-quarter sales, Standard & Poor's, the corporate credit rating agency, downgraded its rating on the textile producer's long-term debt to "B-" from "B+," and its rating on senior unsecured debt to "CCC" from "B-."
In a further slap at the company, S&P said the ratings have also been placed on CreditWatch "with negative implications."
S&P cited "weaker than expected operating performance for the third quarter ended Sept. 27 and anticipated continued weakness in the fourth quarter." Analyst David Kang said, "As a result, financial performance and credit protection measures will be much weaker than expected for all of 2003."
Because of the eroding sales and earnings outlook, S&P said Dan River is now required to hire financial advisors by Oct. 31, and deliver a restructuring plan by Dec. 1.
S&P said it's "concerned about Dan River's ability to improve its operating results given the challenging business environment, expected higher raw material prices, and the tighter liquidity position the company faces with the new minimum excess availability requirement under the bank facility."