Standard & Poor's Ratings Services lowered its long-term ratings Monday on Brunswick Corp.
The corporate credit rating was lowered to 'BBB-' from 'BBB'.
Standard and Poor’s placed these ratings, along with the 'A-3' short term rating, on CreditWatch with negative implications, indicating the possibility for downward rating action over the immediate term.
"The rating downgrade and CreditWatch placement reflect our concerns about the effects of Brunswick's operating outlook revision on credit quality and, more broadly, conditions in the recreational marine industry," said Standard & Poor's credit analyst Andy Liu in a statement.
“While we continue to believe that Brunswick will continue to take appropriate and difficult steps to protect its credit measures and liquidity, the extent of the recreational marine downturn is exceeding our prior expectations,” according to S&P.
Brunswick stock was trading at $10.75 in mid-morning trading. The stock hit its 52-week low Monday, trading at $10.55.
Last week, Brunswick announced plans to scale back its manufacturing capacity to 17 or fewer boat plants by the end of 2008, a reduction from 29 plants in 2007. The company is also reducing its hourly and salaried staff by 1,000, and contemplating further workforce
reductions of 1,000 hourly and 700 salaried employees.
A 'BBB' rating exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation, according to S&P.
The rating may be modified by the addition of a plus or minus sign to show relative standing within the rating category.
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