US Inc wakes up to a tougher life

WASHINGTON: Carmike Cinemas, the third- largest US theatre chain by screens, suspended its dividend, while Duke Energy, owner of utilities in five US states, tapped $1 bn from a credit agreement and RC2 Corp, the maker of infant and preschool products, cancelled an acquisition.

The paralysis in credit markets is changing how US companies do business as banks pull back on loans or make them prohibitively expensive. Some companies are closing plants and stores, postponing takeovers and grabbing any available credit in a fight for survival.

���If businesses don���t have access to capital, smaller companies in particular, they might get wiped out,��� said Alec Young, a New York-based equity strategist at Standard & Poor���s. ���It���s impossible to quantify how expensive this crisis is going to be for Corporate America; there���s unlimited downside.���

Circuit City Stores and memory-chipmaker Spansion face higher interest expenses and slowing sales, analysts said. In the last week, Angiotech Pharmaceuticals scrapped a financing deal and newspaper publisher McClatchy said it renegotiated credit lines.

���It���s almost inconceivable that there won���t be an enormous slowdown in the US markets and with that, increased joblessness, lower employment and higher bankruptcy rates, both personal and corporate,��� Michael Vogelzang, who oversees $2 billion as chief investment officer at Boston Advisors, said.

Carmike Cinemas halted its dividend payment and spent $10 mn to pay bank debt, the Columbus, Georgia-based company said in a statement. Duke has $650 mn in bonds coming due this year, $442 mn scheduled to mature next year and $500 mn in 2010, according to data compiled by agencies.

CFO David Hauser said Duke is drawing from its credit agreement because it wasn���t clear whether it would be able to secure more than $1 bn in new financing this year as planned.