Moody's Investors Service downgraded the senior bank credit facility of UNOVA, Inc. to B2 from B1 in response to expectations that the company will have difficulty finding new financing commitments in light of its continued poor financial performance. The rating outlook for the Woodland Hills, Calif-based automative design and integration company is negative. The company will be looking to pay down its current debt in the near-term, but Moody's believes that a lack of adequate cash flow on hand could present challenges. UNOVA's bank facility was collateralized by domestic inventory, accounts receivables, intangibles, and equipment. A waiver allows the company to borrow up to $245 million under the credit line which has been fully drawn. Moody's insists the company establish a more permanent bank arrangement before January 2001, when the waiver expires as Moody's questions whether or not the company's $100 million in on-hand cash provides adequate liquidity for downside protection in the event that the company is faced with unforeseen set-backs. However, Moody's does note that management changes and programs have been instituted to achieve lower costs and new product rollouts. In addition, Moody's observed that the company continues to explore strategic alternatives for its businesses.
* The $580 million facility of Schaumberg, Ill.-based Pliant Corporation has been downgraded by Moody's Investors Service from B1 to B2. The secured facility comprises a $100 million revolver, $200 million term "A" loans, and $280 million term "B" loans. The ratings outlook is negative. Moody's formed its opinion based upon what it sees as deteriorating profitability, elevated financial leverage, weakening coverage of interest expense, and softer than expected volume, higher than average raw material costs, less than optimal product mix, plant inefficiencies, and excessive overhead. In addition, Moody's expects capital spending to ramp up over the near to intermediate term and the rating agency predicts that cost savings from initiatives presently in place will likely take time before making a material impact on margins.
* RailWorks Corporation's $250 million senior secured bank facility has been downgraded from B1 to B3 by Moody's Investors Service as the Baltimore-based rail systems services company struggles with generally weak financial performance, weak operating cash flow generation, and liquidity issues. Specifically, Moody's notes that the company's financial results have been negatively affected by disappointing performance from some of its more early acquisitions, and the delayed launch of anticipated projects. Moody's said the ratings reflect the company's highly leveraged financial condition resulting from the heavy acquisition activity of the past two years. On a positive note, Moody's said the company will suspend its growth through acquisition model and instead focus on internal cash generation.