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FITCH: IMPERIAL HOLLY 8-3/8% SENIOR NOTES LOWERED TO 'BB' -- FITCH FINANCIAL WIRE --

 NEW YORK, July 12 /PRNewswire/ -- Imperial Holly Corp.'s 8-3/8% senior notes due 1999 are lowered to 'BB' from 'BBB' by Fitch. The action is in response to a weakened credit profile resulting from an industry supply imbalance, depressed refined sugar prices, and unusually poor weather conditions. The credit trend is changed to declining from stable.
 Imperial Holly has experienced net losses over the past three years, resulting primarily from volatile sugar industry pricing and supply trends. Gross margins have declined substantially from 1990-1991 levels of about 13% and, consequently, debtholder protection measures have weakened. Cash flow coverage of interest was only 1 times (x) in fiscal year-end 1994, down from almost 5x at fiscal year-end 1990 and 1991. At the same time, total debt as a multiple of operating cash flow increased to about 15x, dramatically higher than historical levels of about 2x. While leverage is not expected to remain uncharacteristically high, a challenging operating environment will make it difficult for Imperial Holly to return to historic leverage and coverage measures over the near-term.
 Near-term, the rating is supported by Imperial Holly's cost saving efforts, expected reduction in capital expenditures, and manageable debt maturity schedule. In addition, the company also has a significant securities portfolio that provides some level of added liquidity. Intermediate term, however, maintenance of the current rating relies primarily on the company's ability to improve profitability measures and maintain a cash flow profile more consistent with a 'BB' senior debt rating.
 Imperial Holly's weakened credit profile is attributable partially to the overcapacity in the sugarbeet industry and a drop in prices sugarbeet growers currently receive for their crops. Lower prices are forcing many sugarbeet farmers to grow more profitable alternative crops, thereby reducing the supply of raw material needed by beet processors such as Imperial Holly to run their processing plants at full capacity. Additionally, unusually bad weather conditions have compounded the supply problem placing additional pressure on gross margins.
 Imperial Holly is one of the largest producers and marketers of refined sugar, producing both cane and beet sugar. The company markets sugar under the Imperial and Holly brand names and various private labels. Sales are concentrated in the Western U.S.
 -0- 7/12/94
 /CONTACT: Anne Marie May, 212-908-0589, or Keith B. Foley, 212-908-0572, both of Fitch/


CO: Imperial Holly Corp. ST: IN: AGR FOD SU: RTG

DW -- NY088 -- 4806 07/12/94 17:09 EDT
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Publication:PR Newswire
Date:Jul 12, 1994
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