MUMBAI (Thomson Financial) – Fitch Ratings affirmed Compagnie de Saint-Gobain’s long-term issuer default and senior unsecured ratings at ‘A-‘ and short-term IDR at ‘F2’ following the announcement that the French glassmaker was fined 133.9 mln eur by the European Commission for price fixing.The ratings agency said its outlook for the long-term IDR is negative.Fitch said the fine announcement relates to the investigation in the construction glass sector, while another investigation related to automotive glass is ongoing. However, the timing and the size of any potential cash outflow from the latter investigation is presently unknown.Fitch said it expects that the construction glass fine will represent less than 5 pct of Saint-Gobain’s 2007 cash flow from operations, which, overall, is not considered sizeable. However, the negative outlook continues to reflect Fitch’s view that the underlying free cash flow margin of 0.9 pct in 2006 is weak for the current ratings.Moreover, an outcome for the automotive glass investigation implying a fine in sizeable excess of current provisioning might also prompt a rating review, Fitch added. But an expectation of a reduction in net leverage in the next 18 months, arising from likely disposals, mitigates to some degree the potential negative impact on free cash flow generation, it said.TFN.newsdesk@thomson.comndi/ranCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
