S&P puts ATU on watch

Standard & Poor's said it placed its B long-term corporate credit rating on A.T.U. Auto-Teile-Unger AG on CreditWatch with negative implications.

The CreditWatch reflects the company's continuously weak operating performance in the increasingly challenging German automotive aftermarket and S&P's concern that ATU will not be able to comply with financial covenants under its senior secured facilities in the near term, even though it already revised the covenants in September on the expectation of weaker earnings for the full year.

ATU's credit protection measures for the 12 months ended Sept. 30, were down significantly from 2006, with net debt to EBITDAR up to 6.9 times from 6.1 times. The agency said leverage could increase further as a result of the reduced earnings guidance.

Nevertheless, S&P still expects free operating cash flow generation for 2007 to be positive overall.

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