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January 9, 2008 |
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PROPEX INC: S&P Lowers Corporate Credit Rating from B- to CCC Standard & Poor's Ratings Services has lowered its ratings on Propex Inc. by two notches, including its corporate credit rating to 'CCC' from 'B-'. The ratings remain on CreditWatch with negative implications where they were placed on Oct. 8, 2007. "The downgrade reflects ongoing concerns regarding the company's ability to improve its subpar financial profile. These include operating challenges, such as weak residential construction and housing markets, and concerns over negotiating relief from financial covenant violations related to its bank credit facilities," said S&P's credit analyst Henry Fukuchi. As of Sept. 30, 2007, Propex breached several of its financial covenants. The company has been negotiating covenant relief while exploring other arrangements to address its long-term financing needs. The downgrades and CreditWatch listing reflect the continued uncertainty on whether the company can execute a favorable financing plan to resolve its financial covenant violations. S&P notes that Propex reported approximately US$45 million of cash as of Sept. 30, 2007, but S&P is concerned that the current difficult operating conditions will result in further deterioration of the company's liquidity and credit quality if access to a new or amended credit facility is not competed soon. S&P will resolve the CreditWatch upon completion of its review of Propex's business prospects and its plan to restore an acceptable level of liquidity. Continued deterioration in operating performance resulting in weakening credit metrics and failure to resolve the current liquidity concerns will result in additional downgrades. Propex Inc., based in Chattanooga, Tennessee is the world's largest independent producer of primary and secondary carpet backing and a leading manufacturer and marketer of woven and nonwoven polypropylene fabrics and fibers used in geosynthetic applications and a variety of other industrial applications such as fabric bags/containers, fabric protective coverings and concrete fiber reinforcement. The company became a stand-alone company following the acquisition of the BP Fabrics and Fibers Business of BP p.l.c by The Sterling Group, L.P., Genstar Capital, L.P., Laminar Direct Capital, L.P., Paribas North America Inc. and members of management in December 2004. The company has manufacturing operations in North America, Europe and Brazil. |
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