Moody's: Rank outlook negative

Moody's Investors Service said it had changed the outlook for the Rank Group plc and its rated subsidiaries to negative from stable.

Moody's said the change in outlook is prompted by Friday's announcement that Rank's board has begun an investigation of the technical and commercial implications of a separation of its Deluxe Film and Media Services division from the group and reflects the uncertainties this creates regarding the scope of Rank's activities and the make-up of its capital structure.

Separating the Deluxe division, which represented a little more than 40% of Rank's operating profit (before goodwill amortization and exceptional items) and revenues in 2003, would help to focus and streamline Rank's operations but would also remove a significant source of revenue and profit diversification. In addition, there is considerable uncertainty regarding the form of a possible separation, which ranges from a demerger of the unit with the attendant uncertainty of debt allocation to an outright sale.

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