Moody's Downgrades Dynamic Details, S&P Hits Gemstar

  • 15 Sep 2002
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Moody's Investors Service lowered its ratings of Dynamic Details' combined $123 million senior secured credit facilities from B1 to B3. The downgrade reflects the company's continuing losses despite restructuring initiatives and concern over Dynamic Details' spending capacity for information technology and future research and development. Moody's does not expect the Anaheim, Calif.- based company to recover anytime soon, and warns of later downgrades pending further cash balance depreciation that could cause noncompliance of the company's recently amended bank agreement. The sixth amendment of Dynamic Details' credit agreement reset its financial covenants through Dec. 31, 2003, allowing a waiver of previous covenant violations. The credit comprises a revolver and "A" and "B" tranches. "The market visibility for an upturn remains as murky at this time as it has been for months, and we are concerned in regard to their [Dynamic Details'] lackluster performance," stated Moody's senior analyst Howard Sitzer.

Moody's did note the electronic servicing company's leadership in printed circuit board expertise, design, manufacturing, and assembly businesses, despite recent pangs felt from the weakened economy. Dynamic Details' revenues declined under its parent company, with DDi's second quarter numbers, reported at $260 million-- much less than the previous year's $547 million in revenues through second quarter. DDi's financial shortfalls have caused the company to violate Nasdaq listing rules with stock prices falling below the one dollar minimum; DDi traded below 20 cents in August, compared to prices above $21 last summer. Calls to the company were not returned by press time.

*Standard & Poor's has downgraded Gemstar- TV Guide International's corporate credit and bank loan ratings from BB+ to BB, while maintaining a negative watch on the company's debt. S&P's main concerns involve Gemstar's ability to generate profits and maintain its leading place in the consumer entertainment and television-guide industry. The Pasadena, Calif.- based company reported $302.7 million in debt as of March 31, 2002.

Gemstar's inability to settle its current Securities and Exchange Commission filing and officer certification dealings is also a major source of concern. Nasdaq's potential delisting of Gemstar sparked S&P's alarm because of a potential backlash of capital market losses. The delisting threat came after Gemstar delayed in filing its Form 10-Q for the period ended June 30, 2002, in noncompliance with Nasdaq marketplace rules. On August 23, 2002, Gemstar requested a hearing before the Nasdaq qualifications panel to review the proposed delisting. Calls to Gemstar were not returned.

  • 15 Sep 2002

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5 JP Morgan 5,220 8 7.29

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