DUFF & PHELPS LOWERS ARMCO DEBT RATING TO 'B+'
CHICAGO, Oct. 5 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has lowered its senior debt rating of Armco Inc. to 'B+'(Single-B-Plus) from 'BB' (Double-B). This rating action affects approximately $320 million of outstanding debt securities. The 'B+' rating is also assigned to Armco's planned offering of $125 million of senior notes due 2000. Duff & Phelps' rating action reflects our concern over Armco's uncertain operating environment both in the near and intermediate term. Weak general economic fundamentals, cyclicality of end markets and increased competition point to continuing pricing difficulty. With margins being squeezed, cash flow will remain under pressure. Since capital needs continue and with cash flow not expanding, debt reduction no longer seems likely, at least anytime soon. Positively, we continue to view the Cyclops acquisition as a plus, although more work will have to be done to realize fully the benefits of the combined organization. Also, recent write-offs and asset sales allow Armco to further focus on its stainless and electrical steel businesses, while eliminating losing operations (in some cases) and raising cash to support the steel operations. Nevertheless, without improved business and economic fundamentals, increased cash flow and a reduction in financial leverage is not likely to occur. Moreover, a deterioration in these fundamentals and/or new competition (i.e., Nucor), could negatively aggravate an already delicate balance, consuming limited cash resources in the process. -0- 10/5/93 /CONTACT: W. Dudley Heer of Duff & Phelps Credit Rating Co., 312-368-3123/
CO: Armco, Inc. ST: IN: OIL SU: RTG
SM -- NY073 -- 9016 10/05/93 16:11 EDT
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|Date:||Oct 5, 1993|
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