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S&P cuts EMI Group to BB-
Standard & Poor's said it lowered its long-term corporate credit and senior unsecured debt ratings on EMI Group plc to BB- from BB. The B short-term rating was affirmed. The long-term corporate credit rating and debt ratings were put on CreditWatch with negative implications, the agency said.
The downgrade follows EMI's announcement that revenues in its recorded music division (80% of revenues and 61% of EBITDA for the fiscal year ended March 2006) would decline by 6% to 10% in the fiscal year ending March 31, 2007, at constant currencies.
The downgrade and CreditWatch placement also reflect S&P's concerns about EMI's debt burden, which is likely to increase in the coming months as a result of a new £150 million restructuring program and the buyout of minority interests in Japan for £93 million.
To resolve the CreditWatch, S&P said it will focus on better understanding the reasons for and extent of the company's negative revenue trend and EMI's future cash generation potential, financial structure and liquidity.
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