Credit rating agencies Standard & Poor's and Moody's Investors Service each downgraded their credit profile of Texas Industries Inc. on Tuesday after the company's announced that it plans to raise $600 million in new debt.
The cement producer said it launched an offer of senior notes due in 2020 to qualified institutional investors and would use proceeds to retire $550 million in 7.25 percent senior notes due in 2013.
S&P changed its outlook on the company to "negative," affirmed its corporate credit rating at "B" and gave the same rating to the new $600 million issue.
S&P cited sharp drops in Texas Industries' sales and earnings last year.
The company's sales fell 26 percent and adjusted gross earnings dropped 55 percent last year compared with 2008 because of weak construction markets in Texas and California, S&P said.
The firm said the markets will take longer to recover than previously expected, hurting Texas Industries' credit measures over the next several quarters.
Meanwhile, Moody's cut Texas Industries' corporate family rating and probability of default rating to "B3" from "B2." It also lowered its rating for the company's $200 million credit facility to "Ba3" from "Ba2."
The firm's outlook on the company remained at "stable."
Moody's also noted Texas Industries' weak operating performance and credit due to poor demand and falling prices.
The firm said that while public sector demand is expected to pick up, it's unlikely that general industry conditions will improve materially over the next 12 months.
That will limit Texas Industries' opportunities to bolster its business and credit profile, Moody's said.
The firm noted its outlook on the company presumes Texas Industries will continue to focus on cost-cutting, maintaining liquidity and begin to turn its business around next year.
Texas Industries' shares were unchanged at $34.20 in aftermarket trading after falling 76 cents to $34.20 during the regular session.
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