S&P cuts Waterford Wedgwood

Standard & Poor's said it lowered its long-term corporate credit rating on Waterford Wedgwood plc to CCC+ from B-. The outlook is negative.

At the same time, the subordinated debt rating was lowered to CCC- from CCC.

S&P said the downgrade reflects the heightening of Waterford Wedgwood's liquidity risk for fiscal year ending March 2006, based on an acceleration in operating underperformance in recent months.

Given the group's high fixed costs, S&P said it expects that further top-line deterioration would have a substantial impact on earnings and cash flow, which could result in liquidity needs that would be greater than that available over the next 12 months.

Although Waterford Wedgwoood might be able to improve its cost position through a successful integration of the recently acquired chinaware manufacturer, Royal Doulton plc, S&P said the financial benefits are only likely to materialize in the second half of fiscal 2006.

In addition, S&P notes that Waterford Wedgwood will be without a chief financial officer, who recently resigned, during this important stage of integration.

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