Furniture Maker Downgraded, Northwest Continues To Struggle

  • 23 Mar 2003
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Brown Jordan International's $165 million senior secured term loan and $60 million senior secured revolver have been downgraded by Moody's Investors Service from B3 to B1, with the ratings on review for further possible downgrade. A recently missed interest payment as well as continued concerns regarding sustainable cash flow and borrowing availability resulted in the lowered ratings. Standard & Poor's meanwhile has lowered the rating on the company's senior secured bank loan to CC from B. "These actions reflect Brown Jordan's default on its subordinated debt interest payment due Feb. 15, 2003, on notes that mature 2007," said S&P credit analyst Martin Kounitz. Brown Jordan is currently in discussions with its bank group to amend its senior credit facility.

The furniture manufacturer faces a challenging demand environment during its most important sales and sell-through periods, according to the agency. Additionally, competitive threats from low-cost international companies and mass merchandisers continue to pressure Brown Jordan. Moody's review will focus on available liquidity and debt capacity as the company maneuvers through these difficult operating conditions.

* Northwest Airlines Corp. and Northwest Airlines' $5.8 billion in debt is on review for possible downgrade by Moody's, a decision prompted by weak cash flow due to an unexpected decline in passenger demand and increased price competition in the U.S. airline industry. The company's secured revolver carries a Ba3 rating. As with most airline carriers, Northwest has been struggling in a difficult business environment that could further deteriorate with the war in Iraq, according to Moody's.

Despite a reduction in operating costs, Northwest continues to experience cash flow deficits while suffering significant operating losses. The review will primarily focus on the impact of reduced passenger demand on the airline's cash flow and the company's ability to cut costs. Geopolitical events will also be taken into consideration such as a terrorism act that could negatively affect the company's revenue. Furthermore, Moody's will assess the company's debt maturity profile, alternative cash sources and the flexibility Northwest may have to postpone or soften demands on cash. A Northwest spokesperson did not return calls.


Other Ratings Actions*
BroadwingBBDowngraded to BB-Fitch
RevlonB3Outlook Remains NegativeMoody's
Stanadyne Corp.B1Outlook to NegativeMoody's
* Thurs, Mar. 13 through Wed, Mar. 19
  • 23 Mar 2003

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Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 7,029 20 10.95
2 Bank of America Merrill Lynch (BAML) 6,703 19 10.45
3 JP Morgan 4,776 10 7.44
4 Credit Suisse 4,718 9 7.35
5 Deutsche Bank 4,262 13 6.64

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3 JPMorgan 55,390.36 159 9.46%
4 Citi 55,051.46 160 9.40%
5 Credit Suisse 43,756.73 120 7.47%