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Penda Corp.'s $80 Million Senior Note Rating Cut to 'B-'; Off S&PWatch

16 January 1998

Penda Corp.'s $80 Million Senior Note Rating Cut to 'B-'; Off S&PWatch

    NEW YORK, Jan. 15 -- Standard & Poor's today lowered its
rating on Penda Corp.'s $80 million senior notes due 2004, and its corporate
credit rating on the company, to single-'B'-minus from single-'B' and removed
the ratings from CreditWatch, where they were placed June 4, 1997. The rating
outlook is negative.
    The downgrades reflect Penda's weak operating results. Penda manufactures
bedliners and other light truck accessories.  The company sells products to
both OEM dealers and aftermarket distributors. In February 1997, Penda's
largest customer, Ford Motor Co., stopped buying bedliners from Penda.  The
loss of this business, combined with lower selling prices and losses at the
company's fiberglass manufacturing subsidiary, led to significant profit
pressures in 1997.  During the first nine months of 1997, revenues were 16.7%
below the comparable level of 1996 and predepreciation operating margins were
17.8% compared with 31.2% in the previous period.
    Penda now has a new management team that is engaged in actions to restore
the company's strategic focus and operating results.  The company recently
announced that General Motors Co. (GM) would start buying its bedliners this
year, which should help offset the impact of the lost Ford volume.  The GM
business, together with new aftermarket business and streamlining initiatives,
is expected to lead to improved operating performance during 1998.  However,
Penda's small revenue base and leveraged capital structure leave it extremely
vulnerable to the loss of other customers or to a downturn in demand for
bedliners.  The new ratings assume that Penda will be successful in improving
financial results during 1998 and that the company will be able to continue to
amend its credit agreement as necessary during this transitional period.  The
company currently has about $15 million of availability under its bank lines,
an important support for the ratings.

    OUTLOOK: NEGATIVE
    Ratings assume that Penda will be able to improve its operating
performance and maintain its access to bank lines over the near to
intermediate term.  Failure to do either could lead to a review for further
downgrades, Standard & Poor's said. -- CreditWire

SOURCE  Standard & Poor's CreditWire