Mineral Co. Sinks Lower; NorthWestern Faces Debt Pile

Better Minerals & Aggregates Co. has been downgraded from CCC+ to CCC by Standard & Poor's on account of the industrial minerals producer's "continued liquidity erosion, anemic financial performance and higher than expected silica product liability cash outlays," said Dominick D'Ascoli, S&P analyst, in a report. The company operates through its U.S. Silica Co. subsidiary in industrial minerals. "Although Better Minerals & Aggregates' silica operations should generate somewhat stable operating earnings, its operations are capital-intensive and the company faces unpredictable silica product liabilities," S&P explains.

Better Minerals & Aggregates' $230 million bank facility was downgraded, along with the Berkeley Springs, W. Va.-based company's $150 million 13% senior subordinated notes due 2009, which fell from CCC- to CC. J.P. Morgan leads the existing credit, while BNP Paribas is an agent on the deal. Better Minerals & Aggregates is a portfolio company of D. George Harris & Associates and J.P. Morgan Partners. Gary Bockrath, v.p. and cfo of Better Minerals & Aggregates, did not return calls.

* Moody's Investors Service downgraded NorthWestern Corp.'s senior secured debt from B2 to B3, reflecting the company's high debt burden, poor coverage ratios and weak operating cash flow relative to debt levels. Moody's also says that it does not view the company's planned asset sales as sufficient to materially reduce its debt burden. The possibility that the company could execute a distressed exchange for a portion of its debt and challenges to liquidity could jeopardize its ability to meet obligations on a timely basis, Moody's adds. NorthWestern is a diversified service and solutions company with investments in electric gas utility assets, energy services and HVAC, plumbing and telecommunications and data services.

NorthWestern's management is proactively trying to improve liquidity and reduce debt, Moody's notes. The company has put in place a $25 million secured credit, led by Congress Financial Corp., for its Expanets subsidiary and is advancing efforts to complete further financings to help address liquidity issues. Roger Schrum, v.p. of investor relations, confirmed that the company is working on a restructuring plan that includes assets sales and other financing measures.