Color Spot Nurseries Rtgs Lowered, Put on S&PWatch Neg Color Spot Nurseries Inc.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/22/98-- Standard & Poor's today lowered its corporate credit and bank loan 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. to single-'B'-minus from single-'B'-plus. The ratings on the company's 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. were lowered to triple-'C' from single-'B'-minus. Additionally, the ratings are placed on CreditWatch with negative implications. The company had $141 million of debt outstanding as of March 26, 1998. The downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. reflects the recent poor operating performance of this 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. and other live plant varieties, which has resulted in a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in its cash generation and financial flexibility. Adverse weather 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. Above average rainy weather in April resulted in significant lost sales, which were not recovered in the subsequent months. Fourth-quarter and fiscal 1998 results are expected to be well below expectations. In March 1998, the company was in default of their credit agreement and subsequently received a waiver for the March test period. Currently, Color Spot has $23 million outstanding under its credit agreement. Under the current agreement, the company must reduce its working capital line borrowings to under $15 million for a 30-day period between the months of July through September. Standard & Poor's believes the company will be in violation of the terms of its credit agreement in the fourth quarter of fiscal 1998. Also, it is unclear at this time whether enough cash will be generated in the fourth quarter to meet the clean-down requirements. Standard & Poor's will continue to monitor developments, including bank negotiations. -- CreditWire
CONTACT: Kenneth G Drucker, New York 212/208-1339
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