Finning International Inc T.FTT

DBRS Confirms FTT at BBB (High) & R-2 (High)

[Georgia_Straight]

DOMINION BOND RATING SERVICE LIMITED ("DBRS-T") FINNING INTERNATIONAL INC ("FTT-T") - DBRS Confirms Finning International Inc. at BBB (high) & R-2 (high) Rating Trend Rating Action Debt Rated R-2(high) Stb Confirmed Commercial Paper BBB(high) Stb Confirmed Medium Term Notes BBB(high) Stb Confirmed Senior Debentures Note: Medium Term Note rating since October 27, 1999. DBRS is confirming the above ratings for Finning International Inc. ("Finning" or "the Company"), all with Stable trends. The confirmation reflects improving profitability and coverage ratios despite continuing moderately high debt levels. A large part of the improvement in earnings and profitability has been a result of the 2001 acquisition of Hewden Stuart plc ("Hewden"). The addition of Hewden was immediately accretive to earnings, adding over $200 million to EBITDA during 2001, and also shifted Finning's product mix toward profitable and stable rental earnings. The outlook for earnings is positive, even in light of a continuing challenging economic environment, and is supported by: (1) a shift in the product mix in Canada and the U.K., which should result in higher margins; (2) growing market share and continued government spending in the U.K.; and (3) both market share gains and market growth in Chile. With the positive outlook for earnings, the Company is expected to generate positive free cash flow available for debt reduction. Total debt to capital remains modestly high at levels near 58%, but is still reasonable. Finning can support a higher leverage because it is a working capital-oriented company, and its assets tend to be liquid. Moreover, a large portion of the debt is associated with its rental and finance business. Even with no material change in leverage, the coverage ratios showed some improvement with the addition of Hewden's operating cash flow. However, should the Company choose to undertake share repurchases or acquisitions, this could delay any improvement in the balance sheet and keep debt levels moderately high. Dominion Bond Rating Service Limited (DBRS) will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, please contact us at: [e-mail]. DBRS is a Toronto-based, full-service credit rating agency established in 1976. Privately owned and operated without affiliation to any organization, DBRS is respected for its independent, third-party evaluations of corporate and government issues, spanning North America, Europe and Asia. DBRS's extensive coverage of securitizations and structured finance transactions solidifies our standing as a leading provider of comprehensive, in-depth credit analysis. Information contained herein is obtained by DBRS from sources believed by it to be accurate and reliable. Due to the possibility of human or mechanical error as well as other factors, such information is provided "as is" without warranty of any kind and DBRS, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. DBRS shall not be liable in contract, tort or otherwise for: (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of DBRS or any of its directors, officers, employees, independent contractors, or agents in connection with, or related to, obtaining, collecting, compiling, analyzing, interpreting, communicating, publishing or delivering any such information; or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including, without limitation, lost profits), even if DBRS is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. In addition to the foregoing, the rights of subscribers of DBRS are governed by the terms and conditions of the applicable Subscription Agreement. In the event of any conflict between this document and the Subscription Agreement, the Subscription Agreement shall govern (without limitation, a conflict shall not include the failure of the Subscription Agreement to cover a matter covered herein). The credit ratings, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. TEL: [phone] Linda Scott, Kam Hon / ext.2245, ext.2243 / E-mail: [e-mail] ______________________________________ ___________________________________________________________________ (c) Market News Publishing Inc. Tel:[phone] All rights reserved. Fax:[phone] MarketbyFax(tm) - To get the NEWS as it happens, call [phone]. © 2000 StockHouse.com | Disclaimer