S&P cuts Head to B-

Standard & Poor's said it lowered its long-term corporate credit rating on Head NV to B- from B, along with the senior unsecured debt rating on related entity HTM Sport und Freizeitgeraete AG to CCC+ from B-, reflecting the bonds' longstanding subordination to secured creditors. All ratings have been removed from CreditWatch with negative implications, where they were placed in April.

The outlook is negative.

The downgrade reflects the company's proposed shareholder returns and recent announcements that, owing to the impact of disappointing snow conditions on the company's key winter sports equipment division and the effect of U.S. dollar weakness on the racquet sports division, the agency said.

The negative outlook reflects the likelihood that Head will generate negative free cash flows in 2007, weakening its liquidity position materially, S&P said. The ratings could be lowered should operating performance and cash held dip further below expectations, the agency added.

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