Fertilizer Woes Send Royster South; Polaroid Drops To Ca

  • 22 Jul 2001
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Moody's Investors Service lowered the rating for Royster-Clark's $245 million senior secured credit facility to B2 from Ba3 due to significantly lower earnings. Higher nitrogen raw material costs and higher fertilizer prices have weakened fertilizer demand. Royster-Clark, headquartered in New York City, is a privately-owned supplier and distributor of fertilizers, crop protection products, seed, and services to farmers in the South, Midwest and East regions of the U.S.

The rating also reflects rapid growth through acquisition of IMC Global's agribusiness and nitrogen business for approximately $340 million, which tripled sales. The company made four acquisitions last year for purchase prices aggregating approximately $57 million, and is considering possible acquisitions of Agro Distribution South and Pro Source One.

* Moody's downgraded Polaroid's senior unsecured debt rating to Ca from Caa3 and its senior secured bank loan rating to Caa2 from Caa1 due to the company announcement last week that it doesn't intend to make interest payments totaling $26 million due next month. Last week, Polaroid obtained a waiver of certain covenants through Oct. 12 from lenders as well as a waiver of $19 million principal repayment on bank facilities that had been scheduled for this year. Polaroid is based in Cambridge, Mass.

The downgrade also reflects Moody's expectation for continued negative cash flow in the second quarter with positive cash flow beyond that point uncertain, an absence of investment and definitive partnership arrangements for the introduction of new printing media, and refinancing of approximately $500 million of debt.

* Accuride's bank debt was downgraded to B2 from Ba3 due to manufacturing volume declines. Moody's notes that medium and heavy-duty commercial markets have declined, negatively affecting Accuride's revenues and operating cash flow performance over the last 12 months. The Evansville, Ind.-based company manufactures and supplies a broad product line of wheels and rims for heavy and medium commercial vehicles.

* ON Semicondcutor's bank debt rating was downgraded to B3 from B2 due to a precipitous decline in revenues, according to Moody's. Some $1.02 billion in guaranteed senior secured credit facilities are affected. ON Semiconductor, based in Phoenix, Ariz., is the largest independent supplier of semiconductor components, consisting generally of discrete, standard analog and standard logic devices.

The ratings also recognize that liquidity could become a concern for ON Semiconductor. As of March 30, 2001, cash and cash equivalents had been reduced to about $75 million from $189 million at fiscal 2000 year-end.

Supporting the rating is Moody's expectations that the company will manage through this period of financial challenge. The rating notes that the company has solid market positions in broadband and power management.

  • 22 Jul 2001

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1 Citi 7,171 21 10.72
2 Bank of America Merrill Lynch (BAML) 6,901 20 10.32
3 JP Morgan 4,776 10 7.14
4 Credit Suisse 4,718 9 7.05
5 Lloyds Bank 4,420 14 6.61

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5 Credit Suisse 44,888.95 123 7.45%