S&P may cut DBO Holdings

Standard & Poor's said it placed DBO Holdings Inc.'s B corporate credit rating on CreditWatch with negative implications.

The CreditWatch listing reflects an assessment that the company's LIFO (last in, first out) EBITDA, which is used for bank credit facility covenant compliance, may continue to be significantly lower than reported EBITDA in the near term resulting in heightened risk of a covenant breach, S&P said.

The company has a high concentration of sales to the non-residential construction market, but the agency said it expects to see performance improve this year because the company is no longer selling higher cost inventories in an environment of weak prices since those older inventories now have been sold.

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