(Press release provided by Standard & Poor's)
NEW YORK, June 3 - Standard & Poor's said today it lowered its corporate credit rating on Fraser, Mich.-based Venture Holdings Co. LLC to triple-'C' from single-'B'-plus following the insolvency filing of its European subsidiary. The rating remains on CreditWatch with negative implications, where it was placed Dec. 19, 2001. Venture, a manufacturer of plastic automotive components, has total debt of about $877 million.
"The rating action follows the insolvency filing of Venture's European subsidiary, Peguform GmbH," said Standard & Poor's credit analyst Martin King. According to news reports, Peguform's advisory board approved the insolvency filing due to the cancellation of its line of credit and its inability to pay suppliers. Peguform makes up the bulk of Venture's European operations, which generated about 70% of the company's sales during 2001. Venture's North American operations have struggled during the past few years due to reduced automotive production and pricing pressures, while the European operations have continued to perform adequately. "The inability to access cash flows generated by Peguform will severely impair Venture's ability to meet its debt service obligations," Mr. King noted. In addition, Venture's liquidity position is unclear.
Although a recent bank financing provided additional borrowing capacity under the company's revolving credit facility, access to the facility may be limited as a result of Peguform's insolvency filing. Venture has $14 million of interest payments on its public bonds due today, June 3.
Standard & Poor's will continue to monitor events as they develop. The ratings will be lowered should the company default on its debt service obligations.