S&P puts Global Automotive on watch

Standard & Poor's said it placed its BB- long-term corporate credit rating on Global Automotive Logistics SAS on CreditWatch with negative implications, reflecting concerns that the company's trading environment has deteriorated with detrimental consequences for the company's financial position.

The €100 million notes issued by the company's wholly owned subsidiary, GAL Finance SA, which are due 2008, are rated B. This rating has also been placed on CreditWatch with negative implications.

S&P said it has concerns that the financial performance of the company has been significantly affected due to a tighter trading environment in which both volumes and prices have been falling. This is particularly due to declining delivery volumes from Renault SA (BBB+/stable/A-2), which represents more than 70% of Global Automotive's customer base, together with regular price reductions.

S&P said it now believes, therefore, that S&P's previous expectation for minimum EBITDA of €75 million for fiscal 2005 may not be achieved due to the relatively high fixed-cost base of Global Automotive. In addition, there is the possibility that the company might struggle to comply with financial covenants under a committed bank facility.

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