Fitch cuts Navistar ratings on cash flow worries

Associated Press Modified: September 17, 2012 at 10:30 am •  Published: September 17, 2012
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NEW YORK (AP) — Fitch Ratings on Monday cut its issuer default ratings for Navistar International Corp. and its financing subsidiary another notch deeper into non-investment grade status, citing the increasing risk surrounding the company's cash flow.

Fitch lowered the ratings to "CCC" from "B-." The outlook is negative.

The ratings service said the moves reflect the Lisle, Ill.-based heavy truck and engine maker's heightened financial risk, mainly involving its liquidity and negative manufacturing cash flow, and expectations that those concerns will continue into next year.

Navistar has struggled this year amid uncertainty about whether its Class 8 engine, used in the largest commercial trucks, would get Environmental Protection Agency approval.

The company said in July that it was in talks with the EPA on a plan that would allow it to continue shipping trucks while it makes a transition to a new emission-reducing technology that will bring it into compliance with EPA requirements. The new technology is expected to be available beginning early next year. Navistar said at that time that the new plan would add to product development costs.

In the meantime, the company is working to cut other costs, is trimming its workforce and is considering putting some of its businesses up for sale.