Cendant Remains on Rating Watch Evolving by Fitch After Latest Announcements.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Cendant Corporation (CD) remains on Rating Watch Evolving where it was placed by Fitch on Oct. 24, 2005 following its announcement that it plans to separate into four publicly owned companies. Current ratings are: -- Issuer default rating 'BBB+'; -- Revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility 'BBB+'; -- Senior unsecured notes 'BBB+'; -- Commercial paper 'F2'. Today, CD announced that it has established a plan to repurchase up to $500 million of its common stock after stating earlier in the week that it was reassessing its share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. targets and that its previously announced share repurchase target of $2.0 billion over the course of 2005 and 2006 is no longer operative. The company also announced today it is exploring alternatives to complete part of the separation into four independent entities earlier than anticipated. This acceleration may allow the first two spin-offs, Real Estate and Hospitality, to occur in mid-second quarter of 2006 instead of the summer of 2006. While the $500 million stock repurchase plan stock repurchase plan 1. See buyback. 2. See self-tender. is viewed as a minor negative because it will diminish the amount of debt repayment that could occur prior to the separation, there is no immediate rating action as CD has sufficient cash balances to cover the amount and will be generating sizable free cash flow until separation. It still appears that outstanding senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. will ultimately be retired at the time of total separation, although a downward rating risk exists if the plan results in CD debt remaining at a weakened entity or market conditions deteriorate to the extent that refinancing is no longer feasible (see press release dated Oct. 24, 2005 for additional information). Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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