S&P drops Kimball Hill

Standard & Poor's said it lowered its corporate credit rating on Kimball Hill Inc. to B from B+ while lowering the rating on the company's senior subordinated notes to CCC+ from B-.

The outlook remains negative.

"The downgrades reflect our expectation that the company's already weak profitability and internal liquidity will be increasingly vulnerable to deteriorating housing market conditions," explained S&P credit analyst Elizabeth Campbell.

"We expect Kimball Hill to face continued inventory impairments, lot option write-downs and the need to implement pricing incentives, all of which would contribute to very weak profitability and cash flow during the remainder of 2007 and 2008."

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