Fitch: Jenoptik on watch

Fitch Ratings said it placed Jenoptik AG's senior unsecured B+ and short-term B ratings on Rating Watch negative following a statement from Caatoosee AG that it plans to merge with Jenoptik's subsidiary, M&W Zander.

Fitch said it already challenged Jenoptik's earnings quality. It pointed out that under what has been reported as "other operating income," a large part of it was considered as non-recurring and had to be reclassified. Caatoosee in July this year had to request a deadline extension for its annual report 2003/2004 disclosure, as negotiations on its financing arrangements were in progress and hence auditors were unable to form an opinion.

Fitch said it believes that the possible merger, should it come to pass, will further dilute the earnings of Jenoptik and add another problematic business unless the merged entity undergoes a major restructuring exercise.

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