From Detroit Free Press
TROY, MI — ArvinMeritor Inc. said its debt rating was lowered to non-investment grade by Moody’s Investors Service and that the move will boost the company’s borrowing costs.
Moody’s cut its rating on the Troy-based company’s long-term debt to Ba1, one level below investment grade, from Baa3, ArvinMeritor, said in a filing with the Securities and Exchange Commission. The company makes truck axles and automotive exhaust systems.
Moody’s said the downgrade reflects ArvinMeritor’s “relatively poor performance” in 2003 and the first quarter of 2004, a result of lower vehicle production and slow demand for heavy trucks.
“Although Moody’s expects a stronger financial performance from ARM in 2004, driven primarily by an improving heavy truck industry, the improved credit metrics will remain inconsistent with an investment grade credit rating,” the agency said.
ArvinMeritor last month posted a 41 percent drop in quarterly net income to $19 million, in part because of costs linked to a failed takeover bid for Dana Corp.
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