S&P puts Cooper rating on CreditWatch

Findlay, Ohio - Standard & Poor's Rating Services has put Cooper Tire & Rubber Co.'s corporate credit rating on CreditWatch with negative implications.

In October the rating group downgraded Cooper to "junk" status - a rating that can make borrowing more expensive for a company. With the latest action, Cooper's rating remains BB+ but with the CreditWatch.

In the action, S&P cited the tyre maker´s weak operating earnings and cash flow generation as well as the "likelihood that future financial results will fall short of previous expectations." S&P also noted that sales in the fourth quarter grew 6 percent, but operating income fell 18 percent. For the year, sales increased 4 percent yet operating income dropped 58 percent.

"We expect Cooper to see some benefits from improved manufacturing efficiencies and increased sales of its high-margin products," said S&P analyst Martin King. "But it is unclear whether the improvements will be sufficient to strengthen operating results so that the company´s credit protection measures are consistent with the current rating."

Cooper did not provide guidance for 2006 because of the many challenges and uncertainties it expects to face this year, S&P said in a news release.

From Rubber & Plastics News (A Crain publication)

Press release from Standard & Poor's