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S&P cuts YRC to junk
Standard & Poor's said it lowered its corporate credit ratings on YRC Worldwide Inc. to BB+ from BBB-.
The rating was removed from CreditWatch, where it was placed with negative implications on Oct. 29, and the outlook is negative.
The agency said the downgrade reflects worse-than-expected financial performance and operating profitability, weak credit metrics and concerns regarding YRC's near-term operating outlook. The company recently lowered its free cash flow guidance by 25% for full-year 2007 to between $150 million and $175 million.
YRC has experienced meaningful deterioration in earnings and cash flow because of the soft freight environment and challenging conditions in the trucking sector, S&P said, and as a result the agency expects YRC's operating performance and financial profile to remain weaker than previously expected. The total debt-to-EBITDA ratio was about 3.3x as of Sept. 30.
The rating continues to reflect YRC's satisfactory market position in the long-haul, less-than-truckload trucking industry, the agency added.
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