Fitch Assigns 'BB' to Bowater, Inc.'s Sr Secured Bank Debt.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned a 'BB' rating to Bowater, Inc.'s (Bowater) senior secured bank debt. The company's issuer default ratings (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ), 'BB-' and senior unsecured bond ratings, 'BB-', remain unchanged. The Rating Outlook remains Stable. Bowater renegotiated its revolving credit agreement Revolving credit agreement A legal commitment in which a bank promises to lend a customer up to a specified maximum amount during a specified period. revolving credit agreement See line of credit. maturing in 2007 this past May which also replaced its on-balance sheet accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying securitization program. The company's new credit facilities have been split into two, one in the name of Bowater Canadian Forest Products, Inc. ($165 million) and one in the name of Bowater Inc. ($415 million). Both facilities are governed by a borrowing base composed of receivables and inventory and are further secured by intangibles and certain subsidiary stocks. The Bowater Inc. facility matures in May 2011; the Canadian facility (guaranteed by Bowater) matures in May 2007. Bowater continues financially on-track with Fitch's expectations, the declining value of the U.S. dollar suppressing some of the profitability coming from newsprint price increases. Higher fiber costs will need to be recaptured to restore some margin deterioration in the coated and specialty papers product lines. Seasonally, this should occur in the second half of the year. Further debt reduction is expected later this year from the proceeds of expected timberland and asset sales. Bowater made good progress last year with EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become increasing 27% against strong headwinds, a declining demand for newsprint and higher fiber and energy costs. The company must continue to show progress in improving profitability and reducing leverage to a level more appropriate for its ratings. In the event that the pace of improvement is slower than anticipated by Fitch, the ratings could be revised downward. Bowater's major business interests are newsprint (the second largest producer in North America with 20% of capacity), lightweight coated and specialty papers (14% of North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. capacity), supercalendered and uncoated mechanical grades (13% of North American capacity), market pulp (the third largest producer in North America with an 8% share) and lumber. Fitch's rating definitions and 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 web 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. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion