Moody's Investors Service lowered the rating on American Lawyer Media's $29 million secured revolving credit facility reflecting the company's poor financial performance compared to its projections. ALM finished the quarter ending June 30, 2001 with $1.6 million in cash and bank availability of $1.8 million. Moody's notes that cash has the potential to be insufficient during the immediate term. The New York City-based company publishes law journals. Stephen Jacobs, cfo, could not be reached for comment. Calls to a spokesman's office also were not returned.
Additionally, the ratings are constrained by the company's high financial leverage and weak cash flow coverage. The ratings factor in the deterioration in operating performance that the company experienced over the last few years. Supporting the ratings is the company's prominent position in its niche market, which insulates the company to some extent from the broader weak advertising market.
* Moody's upgraded Weight Watchers' $289 million bank facility to Ba1 from Ba2 due to the company's success at increasing attendance and integrating the January 2001 Weighco acquisition. Tom Kiritsis, cfo, could not be reached for comment. Linda Carilli, spokeswoman, also was not available. The rating's outlook is stable considering Moody's expectations that revenue growth will continue to be strong, and that given that logical acquisition opportunities are limited, the company will use the bulk of free cash flow for prudent purposes such as amortizing debt ahead of schedule.
Moody's also notes that the company's geographic diversification provides a buffer against economic disruptions. About one-half of revenue is derived from the United States, one-quarter from the United Kingdom, and the balance largely from Europe, Australia and New Zealand.
* Weirton Steel Corporation's $100 million senior secured bank deal was downgraded to Caa1 from B3 due to weak demand and record-low flat-rolled steel prices. Moody's notes the difficult operating environment has sharply reduced Weirton's liquidity, which fell from $105 million at March 31, 2001 to $55 million at June 30 to $30 million on Aug. 10. Mark Kaplan, cfo, was not available for comment. Rick Garan, head of investor relations, also did not return requests for comment.
Moody's downgraded Gateway's $1.3 billion in debt to Baa3 from Baa2 due to the company's heightened business and execution risk over the near term. The likelihood of continued weak PC demand in the United States, coupled with ongoing intensive pricing pressure in the PC sector will limit gains in revenue and profitability, according to the rating. Calls to Joseph Burke, cfo, were referred to Lana Edwards, who did not return them.
Supporting the rating is a restructuring plan that includes the company providing personalized technology solutions that focus on services and the integration of technologies as opposed to simply selling PCs.