Bankruptcy expert sees defense, media as vulnerable in 2013

Thu Jan 24, 2013 6:01pm EST
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By Nick Brown

NEW YORK (Reuters) - Mid-market defense contractors as well as media and coal companies could be at risk of tumbling into bankruptcy in 2013, credit market guru and New York University professor Edward Altman said on Thursday.

With the U.S. government mulling significant cuts to the defense budget, smaller companies that contract with the government for defense projects could suffer, Altman told a group of restructuring professionals at his 12th annual Corporate & Sovereign Credit Market Outlook luncheon.

Altman is known for establishing the so-called "Z-score" method of predicting a company's bankruptcy risk.

He did not name defense companies he thinks could be bankruptcy candidates, but he said the problems likely would hit smaller firms and that larger ones are not in danger.

In an interview with Reuters after his speech, Altman said the coal industry is expected to continue to suffer as natural gas remains a cheaper energy alternative. One major player in that industry - Patriot Coal Corp PCXCQ.PK - filed for bankruptcy last year, blaming in part the glut of natural gas.

Altman said media companies will also face challenges as specialized online media outlets gain strength.

"The Internet media world is getting very crowded," Altman said in the interview.

Corporate bankruptcies have been less common in recent years as lenders and governments have been more willing to lend to struggling companies.   Continued...