Standard & Poor“s Corp. said it lowered its long-term ratings on French glassmaker and building materials group Compagnie de Saint-Gobain S.A. and its Dutch-based guaranteed unit Saint-Gobain Nederla…
Standard & Poor“s Corp. said it lowered its long-term ratings on French glassmaker and building materials group Compagnie de Saint-Gobain S.A. and its Dutch-based guaranteed unit Saint-Gobain Nederland BV to A from A+, following the completion of the acquisition of Meyer International Plc of the UK. At the same time, S&P said, the ratings were removed from CreditWatch, where they were placed with negative implications on 1 February 2000, when the bid was announced. The outlook on Saint-Gobain is negative, following the company“s bid, announced recently, for Raab Karcher, Germany“s leading building materials merchant, the agency said. S&P affirmed Saint-Gobain“s short-term ratings. “The acquisition of Meyer for EUR1.75 billion – excluding EUR350 million of debt acquired – is expected to have a marginally positive impact on Saint-Gobain“s business profile, by reinforcing the group“s activities in the UK building materials distribution market. However, the resulting enlarged debt burden will significantly weaken the group“s financial profile, which triggered the downgrade,” S&P said. Saint-Gobain has bid DM 932 million for Germany“s Raab Karcher, including debt acquired. With this acquisition, S&P said, “Saint-Gobain will further consolidate its leadership within Europe“s building materials distribution sector.” However, it said, “the bid for Raab Karcher will further weaken Saint-Gobain“s debt protection measures beyond anticipated levels. Net debt coverage by funds from operations is likely to drop below 35% in 2000. The negative outlook also reflects a change in the company“s financial policy, which is more aggressive than in the past.”