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S&P cuts long-term, debt ratings of Furukawa Electric to BB-minus+

Posted on: Thursday, 18 March 2004, 06:00 CST

TOKYO, March 18 (Kyodo) -- Standard & Poor's (S&P) said Thursday it has cut the long-term corporate and debt ratings of Furukawa Electric Co. from BB to BB-minus in light of large losses at the optical fiber solutions unit it bought from Lucent Technologies Inc. of the United States.

The outlook on the company's corporate credit rating has remained negative, the U.S. credit-rating agency said.

''The deteriorating operating and financial performance of the optical fiber solutions unit has resulted in large devaluation losses,'' thus raising the need for an additional capital injection into the unit by Furukawa Electric, S&P analyst Masako Kuwahara said.

In addition, the prospects of a near-term recovery in Furukawa Electric's overall earnings and cash flow have remained uncertain, given the continual challenges the maker of electric wires and cables is facing in the Japanese telecommunications market, she said.

On March 15, Furukawa Electric said it expects to incur an extra one-off loss of 40.1 billion yen due to the devaluation of fixed assets at the optical fiber solutions unit in fiscal 2003 to March 31, bringing its group net loss to an estimated 141.9 billion yen, up from 114 billion yen in fiscal 2002.

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