S&P still may cut International Rectifier

Standard & Poor's said that the BB corporate credit rating on International Rectifier Corp. (BB corporate credit rating) remains on CreditWatch with negative implications.

International Rectifier said it cannot timely file its 10-K for the June 30 fiscal year because of an ongoing investigation, led by the company's audit committee, into the company's financial reporting at a foreign subsidiary and related material weaknesses in internal controls. As a result of the investigation, as well as accounting issues related to restructuring costs and tax matters, the company will need to restate prior years' financial statements, according to S&P.

The ratings were placed on CreditWatch on April 9 when the matter was first disclosed. Subsequently, the company extended the period of time during which its financial results were not to be relied upon, extending back to fiscal 2002, the agency said. Additionally, the company's chief financial officer and certain sales executives have left the company, and the chief executive officer has been placed on leave, S&P said.

The company has further found that cash tax liabilities may exceed $75 million, while its cash outlays related to the investigation have been substantial, according to the agency. While the quality of both accounting and corporate governance remains an analytical concern, the company is believed to have sufficient operating liquidity, S&P said. The company has no debt, which should cushion the downside risk to the corporate credit rating.

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