Engineering and infrastructure company Downer EDI
(ASX:DOW) has been issued a ratings downgrade by Fitch Ratings.
The revised rating follows news yesterday from Downer that it would need a provision of $190 million for the $1.9 billion Waratah railcar project with the NSW Government.
The company also announced that it expected to incur $70 million in impairment charges in the second half of this financial year.
Fitch Ratings says the rating still continues to reflect the company’s strong market position, diversified revenue base and its sound order book.
The ratings agency also says the provision and asset impairments will not trigger a covenant breach.
Fitch says it does not expect any further negative ratings in the next 12 to 18 months.
Downer says the increase in costs associated with the Waratah train project has already largely been funded within existing facilities and projected operating cash flow.
For the 12 months to June 30, 2009 Downer booked a profit of $189.38 million.
