Credit Agency Lowers IPG Outlook

Fitch Gives Holding Company 'Negative' Rating

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NEW YORK ( -- Interpublic Group of Cos. could face a credit crunch next year, according to credit ratings agency Fitch Ratings, which lowered its outlook on the company's credit.

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The agency lowered Interpublic's outlook to "negative" -- which could lead to a possible downgrade of the company's debt -- based on the agency holding company's earnings warning and announcement of additional restatements to earnings last week. Credit ratings affect a corporation's ability to secure credit for operations, and lower ratings can increase financing costs.

$500 million credit line
"The negative outlook reflects concern about financing flexibility in 2003," said Fitch's analysts in their downgrade. While they pointed to Interpublic's cash resources, they warned that its $500 million credit line will expire next May and $587 million in notes could be put to the company in December 2003, which will require new financing.

Fitch had downgraded Interpublic's debt and bank credit in August but upgraded the company's credit outlook to "stable" from "negative" at the time, citing the company's efforts to cut costs and its low level of acquisition activity. But this latest downgrade announcement noted that "Fitch is further concerned about management controls" after last week's events.

Credit ratings agency Standard & Poor's followed last week's earnings warning by downgrading Interpublic's $3 billion in long- and short-term debt. Moody's Investors Service placed the company on watch for possible downgrade last August.

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