S&P: Citation on watch

Standard & Poor's said it placed its B- long-term corporate credit rating on Citation Corp. on CreditWatch with negative implications, following Ford Motor Co.'s announcement that it is sharply lowering its North American production in the second half of 2006, with the largest cuts coming in the fourth quarter.

The agency said that Ford's production of light trucks in the fourth quarter will be down 155,000 units, or 28%, versus fourth-quarter 2005 production.

According to S&P, over the near term, Ford's production cuts will put additional pressure on Citation's liquidity, which was already constrained by strict financial covenant requirements.

Although the company remains in compliance with the covenants, violations are possible in the near term if earnings and cash flow do not improve, S&P added.

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