Standard & Poor’s Ratings Services said Friday that the ratings on Michigan home appliance manufacturer Whirlpool Corp. remain on CreditWatch with negative implications.
Benton Harbor, Mich.-based Whirlpool’s ratings were placed on CreditWatch on July 18, following the company’s announcement that it made a $2.3 billion proposal to acquire Maytag Corp. Whirlpool since has increased the offer to $2.7 billion and Maytag has accepted it. The deal included assumption of about $980 million Maytag debt.
The two companies announced Monday they had signed a definitive agreement to merge.
CreditWatch means the ratings service’s analysts keep a special surveillance on the company due to developing changes. Negative implications mean its rating could be lowered.
Whirlpool had about $1.6 billion of debt on June 30, 2005.
Maytag remains on CreditWatch with developing implications. If the merger is completed, Maytag’s rating could be raised.
“In the event that Whirlpool fails to receive regulatory clearance, the ratings on Whirlpool would be affirmed and taken off CreditWatch and Maytag’s CreditWatch status would be revised back to negative,” said Standard & Poor’s credit analyst Jean Stout.
Maytag’s operating and financial performance has significantly weakened as a result of its high-cost structure, soaring raw material and distribution costs, and limited pricing flexibility, a Standard & Poor’s statement said. In addition, highly competitive industry conditions have pressured the company’s market share in its floor care and home appliance businesses.
From Detroit Free Press