AMF Ratings Placed on CreditWatch Neg by S&P.

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/12/98-- Standard & Poor's today placed its double-'B'-minus corporate credit and single-'B' senior unsecured debt ratings of holding company AMF  Bowling, Inc. on CreditWatch with negative implications.

The double-'B'-minus corporate credit and bank loan ratings, as well as the single-'B' subordinated debt rating of operating subsidiary AMF Group Inc. also were placed on CreditWatch with negative implications.

The CreditWatch listings reflect the company's recent sharp decline in operating performance in the key Asian bowling capital equipment business and weak operating comparisons in the predominately U.S. bowling retail center operations. Also, Standard & Poor's is concerned that a continuation of these trends will result in near-term deterioration in interest coverages.

Standard & Poor's had expected that the growth in bowling center cash flow would offset the decline in the bowling equipment business in emerging markets. However, the decrease in Asia has been worse than Standard & Poor's expected and the unanticipated decline in the core U.S. bowling center business has resulted in increased business risk and has raised concerns about the stability of cash flow.

Operating cash flow declined 51% in the seasonally weak quarter ended June 30, 1998, largely due to a sharp falloff in new bowling center equipment packages in China and other developing markets. Additionally, bowling center operating cash flow, which accounts for the preponderance of profitability, decreased 5% in the quarter ended June 30, 1998, as acquisitions were offset by a decline in comparable center revenue. Comparable center revenue fell 3% in the first half of 1998 due to a slight dip in league participation, management's unsuccessful promotional strategies, and expenses related to AMF's nationally branded chain development activities.

Pro forma operating cash flow coverage of total interest expense for the last 12 months ended June 30, 1998 was thin at about 1.6 times (x). Standard & Poor's expects that operating cash flow coverage of total interest expense will decline for the full-year 1998 due to continued weakness in Asian markets. Pro forma operating cash flow coverage of cash interest expense of about 2.6x for the last 12 months ended June 30, 1998 provides some intermediate-term flexibility, as mandatory cash interest payments on the subordinated discount notes are not required until 2001 and the zero coupon convertible debentures mature in 2018.

AMF remains the world's largest owner and operator of bowling centers in a highly fragmented industry. Its domestic bowling center market share is more than three times larger than the next largest competitor, due to an aggressive acquisition program. However, the company has not been able to fully realize the potential of its increased critical mass.

Standard & Poor's will assess the company's business prospects and acquisition strategy, as well as management's strategies to improve bowling center operating performance, and weigh their impact on credit quality. -- CreditWire

   CONTACT:  Hal F. Diamond, New York, 212/208-1331