Fitch downgrades Rank Group

Fitch Ratings said it downgraded The Rank Group plc's long-term issuer default rating and senior unsecured ratings to BB- from BB+ and removed them from Rating Watch negative. The B short-term rating was affirmed. The outlook is negative.

The downgrade follows the disposal of its film processing business, Deluxe Film, and confirmation of a return of capital to shareholders announced in conjunction with its 2005 preliminary results. Rank plans to operate with a more leveraged capital structure than in the past, and a 9.6% decline in 2005 gaming operating profit show that Rank's core gaming operations are under pressure, the agency said.

In 2005, net debt increased to £739 million from £642 million at the end of 2004 on the back of poor operating cash flow performance of both the continuing businesses and the discontinued operations. Fitch estimated that net debt to continuing EBITDA stood at about 4.0x at the end of 2005, compared to 2.6x a year earlier.

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