Tenneco gets credit rating cut by S&P

Tenneco Inc., the world's largest maker of vehicle exhaust systems, had its credit rating cut one grade by Standard & Poor's and plans to curb restructuring expenses by delaying a factory shutdown.

Standard & Poor's Ratings Services lowered the company's corporate credit rating to B+ from BB-, or four steps below investment grade. The downgrade reflects a view that falling vehicle sales in North America and Europe will hurt profitability and "strain liquidity,' S&P said in a statement.

Delaying the plant closing will reduce restructuring expenses to $31 million from $60 million, the Lake Forest-based company said today in a statement. Tenneco said it won't shut either a ride-control product plant in Cozad, Nebraska, or one in Hartwell, Georgia.

"This change will allow Tenneco to further preserve cash in response to the unpredictability of the current global economic crisis," Chief Executive Officer Gregg Sherrill said in the statement.

Tenneco still plans to cut jobs and close three North American plants by the end of 2009 to produce annualized cost savings of $58 million. U.S. vehicle sales may fall as low as 10 million this year from 13.2 million in 2008, S&P said in a report yesterday.

The supplier will book $23 million of the expenses in the 2008 fourth quarter, and the rest in this year, the statement said.