NEW YORK -- Standard & Poor's on Thursday cut Collins & Aikman Corp.'s debt ratings and said it may cut the company's ratings again, citing concerns about the auto supplier's access to cash amid an increasingly difficult operating environment.
Rising materials costs and reduced car production by Ford Motor Co. and General Motors have made for a difficult business environment for automotive suppliers, S&P said.
Ford and GM on Tuesday reported lower U.S. vehicle sales for February, which combined with their high inventories is forcing them to cut production. Ford and GM account for 45 percent of Collins & Aikman's sales, S&P said.
Collins & Aikman's cash flow has been poor and free cash flow is likely to be negative this year, S&P said. The company has relatively high borrowings, S&P added.
The company has securitized unpaid customer bills and sold assets to raise funds, which reduces available sources for funds in the future, S&P said.
S&P cut Collins & Aikman's corporate credit rating to B, the fifth-highest junk rating, from B-plus.