Brunswick downplays impact of rating agency action

LAKE FOREST, Ill. – Marine industry giant Brunswick Corp. (NYSE: BC) doesn’t expect the lowering of its corporate credit rating by Standard & Poor’s Rating Services (S&P) from BBB- to BB+ to have a significant impact on the company, it said in a statement issued late Tuesday.

“Both our strong balance sheet and ability to generate cash provide us with substantial liquidity and serve us well in economic circumstances such as those affecting the United States,” the company stated. “We will continue to focus on operating our businesses well in these market conditions.”

Brunswick Acceptance Co., its joint venture with a subsidiary of General Electric Capital Corp. that provides dealer floor-plan financing, is unaffected by this announcement, the company said.

“We are, and expect to remain, in compliance with the financial requirements of the joint venture agreement, in spite of the weak market environment,” Brunswick stated. The venture was recently renewed and extended through June 2014.

Brunswick also noted, with regard to its $650 million revolving credit facility, that there aren’t any borrowing constraints resulting from the ratings action and that it doesn’t expect to borrow any more under the facility this year.

“Looking forward, Brunswick anticipates amending the revolving credit agreement to enhance our ability to remain in compliance with the facility’s leverage covenant and to ensure sufficient borrowing capacity if the present U.S. recreational marine market downturn continues into 2009,” the company stated. “We also intend to refinance our $250 million senior unsubordinated floating rate notes due 2009.”

Finally, as a result of its plans to resize the company and reduce fixed costs by $300 million, Brunswick said it expects to generate positive cash flow in 2008 and to end the year with cash in excess of $400 million, up from $267 million at the end of the first quarter of 2008.

For more information on the S&P’s action earlier this month, see Boating Industry news article, Brunswick stock takes a hit.

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