CHICAGO, May 2 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has
assigned a rating of 'BBB+' (Triple-B-Plus) to Mattel Inc.'s $300 million
issue of two-year senior notes. The proceeds will be used to repay maturing
debt. At the same time, the company's senior notes are removed from Rating
Watch -- Down, where they were placed on February 7, 2000. Approximately
$1.2 billion of senior debt is affected by the rating action. The Rating
Outlook is Negative.
The rating reflects Mattel's strong market presence as the world's largest
toy manufacturer, its diverse portfolio of highly recognized brand names and
the diversification provided by its growing international operations. These
factors are balanced against the deterioration in the company's financial and
credit profile as a result of the substantial losses incurred by the company's
software business.
On April 3, 2000, Mattel announced it plans to sell its software business,
which consists primarily of the assets of the former Learning Company (TLC).
The sale of the former TLC business should help Mattel reduce operating
uncertainty and allow management to focus again on its core toy business.
While the level of proceeds from the sale remains an unknown, DCR expects the
sale proceeds to be used in part to reduce Mattel's heavy debt load.
The former Rating Watch -- Down status reflected uncertainties surrounding
timing and proceeds from the sale of the software business and the
undetermined nature of Mattel's senior management team following the departure
of its CEO and COO. The removal of the Rating Watch reflects DCR's increasing
confidence in the company's ability to sell the former TLC business and in the
management continuity provided by Mattel's business unit presidents. DCR
expects Mattel will fill its vacant CEO position over the near term.
However, the Negative Rating Outlook reflects the ongoing softness in
Mattel's traditional toy business. While this business has recently shown
some signs of strengthening, it continues to be dampened by the more
competitive and dynamic nature of the toy industry, with children turning to
computers at a younger age.
SOURCE Duff & Phelps Credit Rating Co.
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Related links:
http://www.dcrco.com
CONTACT:
Philip M. Zahn, CFA, 312-368-3154, or
Michelle Sherman Barishaw, CPA, 212-908-0525, both of DCR
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