S&P keeps TOM on watch

Standard & Poor's said TOM Group Ltd.'s BB+ long-term corporate credit rating and TOM Holdings Ltd.'s BB+ $150 million convertible bonds due 2008 remain on CreditWatch with negative implications, where they were placed on Oct. 22, 2007.

The agency said it still has not received adequate information to resolve the CreditWatch placement and that the ratings are likely to be lowered unless S&P is satisfied that TOM's new strategy can mitigate the negative impact of several key issues on its operating performance.

The original CreditWatch placement reflected a weakening of TOM's wireless internet service, which has historically accounted for more than 50% of its revenue. The agency is also awaiting clarification on management's response to the strategic alliance between China Mobile Ltd. and several other mobile phone producers that has negatively affected its wireless internet operations.

Recent management restructuring at TOM has added to the uncertainty over the company's future business strategy, S&P said.

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