S&P: JVC may be impacted

Standard & Poor's said that plans for a business consolidation, as reported by the media, between Victor Co. of Japan Ltd. (JVC Corp., BBB-/negative/A-3) and Kenwood Corp. (NR) could affect the ratings on JVC.

According to the media reports, the companies have reached a basic agreement on the consolidation of their businesses and this could include the sale of Matsushita Electric Industrial Co. Ltd.'s (AA-/stable/A-1+) shares in its currently consolidated subsidiary JVC to the newly integrated company.

S&P added that neither JVC nor Kenwood have officially confirmed the reports, noting that it believes that it remains too early to take action on the rating on JVC, and will determine the impact on the rating after confirming that the two businesses are targeting consolidation.

As the current corporate credit rating on JVC incorporates to an extent the possibility for receiving operational and financial support from parent company Matsushita, if the reports of consolidation are true and JVC's capital ties to Matsushita are weakened, there is a high likelihood that there will be a negative impact on the rating on JVC, the agency said.

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