S&P lowers Adecco ratings

Standard & Poor's said it downgraded its long-term ratings on Swiss-based Adecco SA, the world leader in temporary staffing, to BBB- from BBB+ and placed the ratings on CreditWatch with developing implications.

The action followed Adecco's announcement in Switzerland earlier Monday that it expected the audit of its financial statements for 2003 to be delayed. Adecco had about €2 billion of gross debt at Sept. 30.

Adecco said reasons for the delay included identification of material weaknesses in internal controls at its North American subsidiary, Adecco Staffing, as well as possible accounting, control, and compliance issues at other, unspecified subsidiaries. The company also said it was addressing these matters and determining their affect on Adecco's consolidated financial statements.

"The downgrade mainly reflects our concern that we cannot assess the full effect of these potential accounting, control and compliance issues on Adecco's credit quality, based on information publicly disclosed by the company," said S&P credit analyst Melvyn Cooke.

The rating also reflects Adecco's statement that it was not in a position to indicate when the audit of its 2003 consolidated financial statements would be completed.

In addition, the company could be subject to a reduction in its liquidity if it is unable to access its confirmed bank lines following a trigger of covenants such as MAC clauses (substantially all of Adecco's debt carries cross-default language).

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