S&P cuts Schuff ratings

Standard & Poor's said it lowered its corporate credit rating on Schuff International Inc. to CCC from B- and also lowered its senior unsecured debt rating to CCC from B-.

The outlook is negative.

S&P said the downgrade is due to heightened financial risk, with unrestricted cash declining to just $1 million at March 31 from $7 million at Dec. 31, 2003. In addition, Schuff was not in compliance with its financial covenants at year-end 2003 but received a waiver of noncompliance in March 2004. The company had only $6 million of capacity under its $15 million bank credit facility at March 31 and has annual interest payment obligations of $10 million.

Increased liquidity constraints, combined with a declining backlog and extremely high debt leverage (10x total debt to EBITDA), led to the downgrade.

S&P said the ratings on Schuff International reflect the company's nominal liquidity, very aggressive financial profile, and well-below-average business position as a construction firm competing in very challenging markets.

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