Fitch drops Dana, on watch

Fitch Ratings said it downgraded the senior unsecured debt and senior unsecured bank facility of Dana Corp. one notch to BB+ and placed the ratings on Rating Watch negative, following the announcement the company has reduced its full-year 2005 earnings outlook, in part, as a result of manufacturing inefficiencies at its commercial vehicle unit and continued raw material cost pressures.

Fitch said rating concerns include the quality of Dana's internal controls and uncertainty about potential waivers, amendments or modifications to the bank agreements, especially bank requirements for security.

Offsetting the concerns about reduced operational performance and the uncertainty regarding the five-year revolver is Dana's booked new light vehicle business, which when launched should further diversify its customer base and geographic sales mix, as well as Dana's liquidity at the end of the second quarter that included $651 million in balance sheet cash and availability of $635 million in other lines of credit, the agency added.

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