S&P AFFIRMS SEA CONTAINERS' RATINGS

S&P AFFIRMS SEA CONTAINERS' RATINGS

Standard and Poor's Corp. affirmed Sea Containers Ltd.'s credit ratings, saying in a statement that an asset-sale and stock repurchase program "have led to a reduction in reported debt leverage."

S&P had hinted last year it might downgrade Sea Containers' credit rating after the Bermuda-based container-leasing and ferry company became the target of a hostile takeover attempt.While acknowledging a recent improvement in the balance sheet, Richard Koze, S&P analyst, told The Journal of Commerce the rating agency won't consider upgrading Sea Containers' current B+ rating on preferred stock and BB- rating on subordinated debentures of Orient Express Hotels Inc. until more is known about what the company plans to do with its excess cash. Sea Containers' implied senior debt rating is BB+.

The issues were removed from S&P CreditWatch, where they were placed May 29 following a tender offer by Temple Holding AG, an acquisition entity formed by Stena Holding AG and Tiphook PLC. The tender offer was withdrawn after Sea Containers agreed to sell its dry cargo and tank container fleet to Tiphook and 75 percent of its ferry operations to Stena.

"Disposition of some of the less profitable, more cyclical businesses improves Sea Containers' overall risk profile and should lead to increased profit margins," S&P said in a statement issued Wednesday. It said the remaining businesses - specialized marine containers, Isle of Wight ferry service and real estate surrounding ports in the United Kingdom - "provide a strong and stable cash flow stream and have good upside potential. However, given the expected excess cash generation and lower leverage, a future acquisition is possible."