S&P cuts James River Coal view to negative

Standard & Poor's said it revised its outlook on James River Coal Co. to negative from stable and affirmed all ratings on the company, including the B+ senor secured bank loan rating with a recovery rating of 1 and the CCC+ senior unsecured debt rating.

S&P said the outlook revision reflects the company's weaker-than-expected performance to date, and concerns that rising raw-material costs and a substantial increase in its capital expenditure plans could result in negative free cash flows and a further erosion of its limited liquidity in 2006.

The rating on James River reflects its relatively small size, high operating costs, an aggressive capital spending plan, and capital-intensive operations. The ratings also reflect an aggressive financial profile, thin free cash flow prospects despite strong coal prices, and concerns about tightening liquidity, the agency said.

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