Fitch Ratings: PHH Remains on Rating Watch Negative.CHICAGO -- The ratings for PHH PHH Provinciale Handelsschool Hasselt (school) PHH Pasukan Anti Huru-Hara (Anti Riot Task Force) PHH Phillips Head (screw) PHH Planar Halogenated Hydrocarbon Corporation (PHH) remain on Rating Watch Negative by 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. . Approximately $1.5 billion is affected by this action. The ratings affected are as follows: --Issuer Default Rating (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. ) 'A-'; --Senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'A-'; --Commercial paper 'F2'. The Rating Watch Negative continues to reflect Fitch's concern with the prolonged delay in filing financial statements due to accounting issues, in part, related to PHH's spin-off from Cendant Corp. (Cendant) in January 2005. The accounting issues center on certain tax allocations, goodwill valuation, and consolidation of certain legal entities. Based on Fitch's understandings of the accounting issues, these in of themselves would not alter Fitch's view of PHH's credit profile. Nonetheless, the accounting issues suggest a lack of diligence on accounting matters and present a challenge for PHH to address in a timely fashion. In addition, due to materiality MATERIALITY. That which is important; that which is not merely of form but of substance. 2. When a bill for discovery has been filed, for example, the defendant must answer every material fact which is charged in the bill, and the test in these cases seems to of accounting changes, the potential exists for PHH to have to restate prior periods, further delaying release of financials. As a result of the continued delays, PHH has attained additional waivers extending the delivery date of financial statements. PHH now would be default under its bank credit facility if it fails to deliver financial statements by Sept. 30, 2006 or the date by which principal amount of any indebtedness issued under PHH's public notes indenture shall become due and payable. Moreover, this has reduced PHH's access to capital markets. In addition, bond holders could accelerate payment on PHH's $1 billion outstanding public debt, which would pressure liquidity. To date, bondholders have not elected to accelerate the maturity of the public debt. Fitch anticipates that PHH will secure additional funding capacity to address any potential acceleration of the public debt. Resolution of the Rating Watch Negative will be driven by release of audited financial statements, satisfactory review of the effects of the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. on PHH's financial condition, and review of the company's operations with management. Additional delays beyond Sept. 30, 2006 or new accounting issues could result in a downgrade of the company's ratings. 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. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion