Moody's might downgrade Matador

Moody's Investors Service said it placed the Baa3.sk long-term national scale rating of Matador Automotive Vrable as on review for possible downgrade as a result of a deteriorating business outlook with rapidly declining sales, a stretched capital structure and tight liquidity profile.

The agency is concerned about a more severe decline in automotive production volumes in Central and Eastern Europe than it had previously expected. It said this decline is already visible in substantial double-digit declines in revenues and operating losses for Matador in the first half of 2009 and which could last into 2010.

For 2009, management has planned a large capacity expansion program with substantial retooling investments related to upcoming projects predominantly for Volkswagen. Moody's said these are expected to be funded primarily with debt, thus adding to an already levered capital structure, and that these developments are likely to result in an unbalanced capital structure in 2009 following an already significant increase in debt at the end of 2008.

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