Fitch Turns Negative on Sanluis

Fitch has put Mexico’s B minus rated Sanluis on rating watch negative owing to a weak liquidity position. The firm had $23.2m of cash and marketable securities on its balance sheet at the end of March 31 and is also susceptible to deterioration in the US auto industry, particularly light truck vehicles. “Cash-on-hand plus cash flow generation may be insufficient to continue amortizing debt in the near-term,” says Fitch. Amortizing debt for the next three fiscal year consist of $35m in 2008 (full year), $36m in 2009, and $93m in 2010. “Difficult credit market conditions, beyond management’s control, have delayed the company’s ability to complete a bond offering announced in October of 2007, which has been put on hold awaiting credit market improvement. However, financial performance deterioration in 2008 may complicate the company’s ability to refinance its debt,” says Fitch. It expects to resolve the review in the next 3-6 months. Sanluis is the world’s largest producer of leaf springs, supplying GM, Ford and Chrysler. It operates in the US, Mexico, and Brazil.