Credit ratings agency Standard & Poor's has put Fisher & Paykel's (NZSE: FAP) corporate and financial services ratings on CreditWatch with negative implications following the company's restructuring announcement.
Yesterday Fisher & Paykel said it plans to separate its Healthcare division and its Appliance and Finance divisions into two listed companies - Fisher and Paykel Healthcare and Newco. The separation, which requires shareholder and regulatory approval, is due to be completed by the end of next year.
Standard & Poor's says the CreditWatch Negative reflects Newco's more narrow focus on the mature and highly competitive Australasian whitegoods market and the loss of access to the Healthcare division's growing cash flow and US dollar revenues.
It says there is also uncertainty on Newco's financial policy given heightened operating risks in the Australasian whitegoods industry, particularly Australia.
The agency says competition in the Australian whitegoods market, which accounts for about 60% of Newco's unit sales, continues to intensify, with Email negotiating the sale of its whitegoods operation to Electrolux and with imports undermining prices and margins.