S&P Threatens to Downgrade IPG Stock to ‘Junk’ Status

23 January 2003

The once seemingly invulnerable Interpublic Group on Wednesday evening came close to the ultimate corporate indignity – the downgrading of its stock to junk status.

Credit rating agency Standard & Poor’s last night warned the agency holding company it will judge in the “near term” whether to consign IPG’s stock to ‘junk’ status or retain it at the current level of one notch above detritus. Intoned S&P: “There is no remaining cushion in the rating to withstand any negative news or disappointing earnings performance.”

Interpublic has been on the ratings rack since December when America’s three main credit arbiters – Fitch Ratings. Moody’s Investors Services and S&P – all downgraded its credit status [WAMN: 16-Dec-02].

IPG will remain in this painful position until its debt position is finally sorted – one way or the other. Currently in negotiation with its lenders, IPG recently agreed an extension of the January 15 completion deadline to February 10 [WAMN: 16-Jan-03].

The group is also under the shadow of investigation by the Securities and Exchange Commission, ratcheted-up from informal to formal status only this week [WAMN: 20-Jan-03]. The inquiry centers around improperly expensed charges at IPG’s McCann-Erickson WorldGroup unit for which its parent has taken a $181.3 million charge.

Data sourced from: AdAge.com; additional content by WARC staff