S&P cuts Dana to junk, on watch

Standard & Poor's said it lowered its corporate credit and senior unsecured debt ratings on Dana Corp. to BB+ from BBB- and placed the ratings on CreditWatch with negative implications.

S&P said the downgrade and CreditWatch listing follow the company's announcement that it is cutting its full-year 2005 earnings guidance by more than 50%.

The company is also assessing whether it must write down U.S. deferred tax assets as a result of the change in the earnings outlook for its U.S. operations, the agency said, adding Dana may have to seek amendments to its unsecured bank credit facility, as it may no longer be able to remain in compliance with certain bank covenants.

S&P added costly manufacturing inefficiencies are occurring within the company's commercial vehicle business, and this will require investments and time to fix.

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