S&P; Lists Oil Tool Firm in CreditWatch Report

Baker International Corp. has been placed on the Standard & Poor’s Corp. list of firms that may face a downgrade in credit ratings as a result of the prolonged slump in the oil industry.

The Orange-based oil tool company is one of eight oil services corporations nationwide placed on S&P;’s CreditWatch list Monday.

Roy Weinberger, managing director of S&P;’s industrial and utility rating department, said Tuesday that Baker’s senior debt was listed because of the “likelihood that drilling activity will be less than buoyant in the foreseeable future.”

Being placed on the CreditWatch list doesn’t necessarily mean that a company’s credit rating will be downgraded, Weinberger said, but the move does caution investors that a “serious review is under way.”

While Baker has managed to cope with a depressed market and its single-A classification from Standard and Poor’s makes it the third-highest rated of the eight firms placed on the list, Weinberger said that continued problems for the oil-service industry “raises the question of how much fat a company like Baker (can) take out of its operation.”

Ron Turner, Baker’s vice president, said Tuesday that the company doesn’t expect any “precipitous action” as a result of being placed on the CreditWatch list. Baker, he said, is “paying down debt instead of accumulating debt” and employment levels at the company have remained stable over the last two or three years.

Long-term recovery, however, “depends on the business, and business is not looking encouraging in 1986 for us,” Turner said.

In fiscal 1984, Baker reported net income of $70.6 million, compared with a loss of $63.5 million a year earlier. Revenues for the year ended Sept. 30, 1984, were $1.834 billion, down slightly from revenue of $1.837 billion in 1983.

For the first nine months of fiscal 1985, Baker had profits of $61.7 million, up 34% from the $45.7 million it made a year ago. Nine-month revenues were $1.4 billion, compared with $1.3 billion in 1984.

In addition to Baker, the Credit Watch list names NL Industries of New York and six companies headquartered in Texas, including Dresser Industries Inc. and the Halliburton Co., both of Dallas, and Cameron Iron Works, Hughes Tool Co. and Zapata Corp., all of Fort Worth.

Weinberger said that if changes in any of the credit ratings occur, they would take place within two to three months, after meetings of S&P; analysts and officials of the companies.