Brunswick optimistic despite lowered S&P rating
Following Standard & Poor's Rating Services (S&P) lowering its corporate credit rating, Brunswick Corp. (NYSE: BC) said it does not believe the move will have any significant effect on it. S&P cut its long-term corporate-credit rating on Brunswick to BB+ from BBB- and its short-term corporate-credit rating to B from A-3.
Brunswick said in a statement, "Both our strong balance sheet and ability to generate cash provide us with substantial liquidity and serve us well in economic circumstances such as those affecting the United States. We will continue to focus on operating our businesses well in these market conditions."
The cut reflects "cyclical and secular trends in the recreational marine industry and their effect on Brunswick's credit quality," analyst Andy Liu said in a statement from S&P. S&P removed Brunswick from CreditWatch; it had posted the company there on June 30, saying that it might downgrade the ratings.
Brunswick noted that there are no borrowing constraints with its $650 million revolving credit facility as a result of the ratings action. It added that it does not anticipate any borrowings under the facility for the remainder of 2008, and intends to refinance its $250 million senior unsubordinated floating rate notes due 2009.
"We will continue to execute our previously announced plans to resize our company and reduce fixed costs by $300 million," it said in a statement. Brunswick expects to generate positive cash flow in 2008 and to end the year with cash in excess of $400 million, up from $267 million at the end of the first quarter of 2008.
Brunswick had $730 million of debt outstanding as of March 29.
Sport Chalet signs expanded senior credit facility
Sport Chalet (Nasdaq: SPCHA and SPCHB) said it has signed a new expanded senior credit facility with its existing lender, Bank of America, N.A. The new senior credit facility expands total availability to $70 million from $40 million and expires in June 2012.
"As we work to position our company for the future, and continue to take a long-term approach to managing our business, this increased capacity provides us with additional financial flexibility and enhances our capital structure," Craig Levra, chairman and CEO, said in a statement. "In addition, given the current environment, we believe our ability to secure this financing is a clear indication of the continued support that our lender has in our business strategy."
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