S&P: Service Corp. unaffected

Standard & Poor's said Wednesday that the ratings and outlook on the large funeral and cemetery provider Service Corp. International (BB-/stable/--) will not be immediately changed as a result of a memorandum of understanding to settle shareholder litigation over the company's 1999 acquisition of Equity Corp. International.

Under the proposed settlement, Service Corp. would place $65 million in escrow. Insurance carriers would provide $30 million toward the settlement, reducing the company's net financial liability to $35 million.

S&P said Service Corp. easily has the wherewithal to fund the settlement. The company generated a relatively healthy $229 million of funds from operations in 2003, and at year-end, it had $239 million in cash and $115 million of unused bank lines. Its March 2004 divestiture of French operations provided an additional $300 million, and a pending IPO of an overseas venture should further supplement funds.

If enacted, the proposed settlement, which is still subject to court approval, would help lift a litigation cloud that has dogged the company, the agency said. But Service Corp. will still have exposure to lawsuits alleging negligence and misconduct at two Florida cemeteries.

In December 2003, the company agreed to settle the majority of these claims for $100 million, but it is uncertain whether the settlement will stand.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.