S&P: Cendant unaffected

Standard & Poor's said there's no affect on the ratings and outlook of Cendant Corp. (BBB/positive/--) following the announcement that the company intends to distribute the mortgage and fleet operations of its subsidiary, PHH Corp., to Cendant shareholders.

As part of the planned spinoff, S&P said Cendant will make a $200 million capital contribution to PHH and will enter into a joint venture with the entity designed to preserve the cross-selling opportunities that exist between the mortgage business and Cendant's residential real estate, relocation and settlement services business. In addition, prior to the spinoff, the relocation and fuel card businesses will be distributed to Cendant.

The spinoff is expected to be consummated in the first quarter of 2005 and reinforces Cendant's strategy to focus on its travel and residential real estate sectors, by divesting its non-core businesses and employing its capital in such a way as to strengthen its competitive position in these two segments, S&P said.

S&P said it expects that leverage, as measured by total debt to EBITDA, will improve to the low-2x area at Dec. 31 from 3.1x at Dec. 31, 2003.

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