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Walbro's S&P Outlook Revised to Negative; Ratings Affirmed

9 March 1998

Walbro's S&P Outlook Revised to Negative; Ratings Affirmed

    NEW YORK, March 9 -- Standard & Poor's today revised its
outlook on Walbro Corp. to negative from stable and affirmed its double-'B'-
minus corporate credit rating.
     At the same time, Standard & Poor's affirmed its single-'B'-plus senior
unsecured notes rating on Walbro Corp. and its single-'B' preferred stock
rating on Walbro Capital Trust.  The preferred stock is guaranteed by Walbro
Corp. A total rated debt of about $210 million and preferred stock of
$50 million are affected.
     The outlook revision is based on the company's disappointing operating
results and weakening credit protection measures.
    Walbro's operating performance during the past two years has been below
expectations as a result of:
    -- New product launch delays,
    --  Excess capacity,
    -- A downturn in the two-wheeled vehicle market in China, and
    -- Start-up expenses related to heavy investments to meet future plastic
fuel tank demand.
    Walbro is a leading manufacturer of automotive fuel systems, including
fuel pumps, fuel modules, and plastic fuel tanks.  It also produces
carburetors and ignitions for small engines.
     For fiscal 1997, Walbro reported a net loss of about $37 million.  The
loss was primarily caused by asset impairment writedowns, increased warranty
reserve expenses, and restructuring charges to cover actions intended to lower
the company's cost structure and enhance core operations.  Credit protection
measures are weak for the rating, with total debt to earnings before interest,
taxes, depreciation and amortization (EBITDA) at over 7 times (x), and EBITDA
interest coverage at about 1.5x.
    OUTLOOK: NEGATIVE
    While restructuring actions are expected to result in some improvement in
profitability, Walbro will continue to face challenges from cyclical and
competitive market conditions.  Continued weak operating results could result
in a ratings downgrade, Standard & Poor's said.-- CreditWire

SOURCE  Standard & Poor's CreditWire