S&P Revises Outlook on Hanley Wood: ‘Negative’

Frank Anton: HW ‘remains aggressive, financially strong.’

By Dylan Stableford
03/04/2008

Citing the soft housing market and “weaker than expected” 2007 operating results, Standard&Poor’s revised its outlook on Hanley Wood late last week to “negative” from “stable.”

“Our concern that the soft U.S. housing market and general economic conditions will continue to pressure performance in 2008,” S&P credit analyst Michael Altberg said in a note accompanying the revision, adding that revision reflects the “high financial risk” resulting from JP Morgan’s $650 million leveraged acquisition of the company in 2005, a decline in EBITDA, “cyclical operating performance” and “limited business diversity.”

“As everybody knows, the housing market is at a post-WWII low point,” Frank Anton wrote in an e-mail to FOLIO:. “However, HW remains aggressive and financially strong.”

[SEE RELATED VIDEO: Anton at the FOLIO: Publishing Summit in Miami]

S&P did reaffirm all of its ratings for Hanley Wood, including its “B” corporate credit rating. But Altberg said that “good niche competitive positions” in the residential publishing and exhibition industries “only partially offset these factors.”

Anton says Hanley Wood remains committed to a growth strategy “tied almost exclusively” to the construction market. “As it is, neither our loan pricing nor our covenants are based on ratings.”