S&P drops Global Automotive Logistics

Standard & Poor's said it lowered its long-term corporate credit rating on Global Automotive Logistics SAS (GAL) to B+ from BB- in light of likely further deterioration in the company's trading environment during the second half of 2005.

At the same time, S&P said it lowered its rating on related entity GAL Finance SA's €100 million subordinated notes to B- from B.

All ratings remain on CreditWatch with negative implications, where they were placed on Aug. 1, reflecting the agency's uncertainty over the companies' future performance.

The ratings on GAL reflect the group's reliance on Renault, its exposure to the competitive, volatile and cyclical automotive logistics industry and its leveraged financial profile, S&P noted, adding nevertheless, the company has a strong track record of reducing debt through free cash flow generation.

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