Color Spot Nurseries Rtgs Affirmed by S&P; Off Watch.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 10/21/98--Standard & Poor's today affirmed its single-'B'-minus corporate credit and bank loan ratings, as well as its triple-'C' subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. ratings, of Color not of the white race; - commonly meaning, esp. in the United States, of negro blood, pure or mixed. See also: Color Spot Nurseries Inc. The ratings are removed from CreditWatch, where they were placed with negative implications in July 1998. The outlook is negative. The ratings action reflects the recent announcement that Color Spot had closed on a $70 million working capital facility with Fleet Capital Corp. The new facility, replacing a previous line of 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. , provides the company with the funds needed to continue production for the spring 1999 selling season. The corporate credit rating reflects Color Spot's high debt level stemming from an aggressive acquisition strategy, a concentrated customer base, and vulnerability to extreme weather conditions. Adverse weather in the spring of 1998 and, to a lesser extent, integration problems have led to perishable per·ish·a·ble adj. Subject to decay, spoilage, or destruction. n. Something, especially foodstuff, subject to decay or spoilage. Often used in the plural. inventory charges and inefficient and costly operations, resulting in a deterioration in the company's cash generation and financial flexibility. Color Spot is a leading provider of annual bedding plants bedding plant Plant that is grown, usually in quantity, in pots or flats in a greenhouse or similar structure, and that is intended to be transplanted to a flower garden, hanging basket, window box, or other outdoor planter. Most bedding plants are annuals. , with strong market positions in the Western U.S., and sales primarily in the Western and Southwestern regions. Color Spot is positioned to service large mass merchandisers and home improvement chains, which are taking an increasing share of the growing seasonal lawn and garden markets. The company has a total of 850 retail and commercial customers, representing over 8,000 locations. Despite the company's ability to leverage fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). such as production and transportation, Color Spot's high debt burden, historical results, and acquisition orientation significantly limit its ratings. OUTLOOK: NEGATIVE Without improvement in operating results through Color Spot's next selling season, credit quality could deteriorate further.---CreditWire |
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