Rexam shares slide on S&P ratings cut

Rexam, the FTSE 100-listed drinking can maker, announced solid full-year 2008 results yesterday, saying that pre-tax profits were up £83m to £328m. But the share price fell by 10 per cent to 278.5p, a 12-month low, as the group said its focus this year would be on cash generation and cost-cutting.

Investors are concerned about the group's debt, which was stated at £2.6bn yesterday. A spokesman for the company said it is still well within its banking covenants and has another £700m of headroom. On a leverage multiple, the debt stands at 2.7 times [underlying earnings] Ebitda, with the covenants set at 3.5 times, he said. The ratings agency Standard & Poor's cut Rexam's credit rating yesterday by one notch to BBB-, the lowest investment grade level, blaming "Rexam's continued weak financial performance for the previous rating", and that it is unlikely to improve this year.