Moody's Investors Service has downgraded the senior subordinated notes and revolving credit ratings of industrial cutting tools manufacturer Simonds Industries, citing the historic lows the timber industry has hit, forcing many mills to shut down to reduce inventory. The revolver rating has been moved from B1 to B3 and the notes to Caa2 from B3. Simonds has reported poor operating performance along with weakened credit protection measures and Moody's expects further weakness in both the manufacturing and wood industries. In addition, the strength of the dollar has made the company's overseas sales less price competitive, while aiding several of its European competitors entry into the U.S. market. As of June 30, Simonds was in default of several covenants in its senior revolving facility, though an amendment has been agreed to. * Moody's has downgraded the ratings of Montgomery, Ala.-based Blount, including the $440 million of credit facilities from B1 to B3. Blount is a sporting ammunition business and industrial and power equipment manufacturer. The downgrades reflect poor performance and weakened credit protection measures, aggravated by its high leverage and weak balance sheet. The sluggish economy has battered Blount, with income declining by 40% from a comparable period last year. The industrial and power segments of the company, which manufactures equipment for the timber industry has been affected by the downturn in the paper and pulp industries. Blount's own manufacturing facilities are running at about half of capacity. The ammunition business has been affected by price erosion in the competitive law enforcement market with sales in the first half of this year down 24% from last year, according to Moody's. Management is anticipating a good hunting season in the coming fall, but Moody's believes that the gloomy economic outlook may dampen hunting-related spending. Blount's management has responded with cost-cutting measures, including plant closure, temporary layoffs and outsourcing of certain corporate functions. * Moody's has downgraded San Jose, Calif.-based Condor Systems' $50 million senior secured credit facility to Caa1 from B1, prompted by the company's announcement of non-compliance with financial covenants. The covenants were violated due to sharply lower reported earnings, as the company recorded significant program cost--to complete growth on several multi-year fixed contracts. The company, which provides advanced signal collection and electronic countermeasure products for electronic warfare, indicated that the interim covenant waiver obtained in April expired Aug. 15, and it expects to obtain additional waivers. A financial advisor has been hired and Condor is evaluating alternatives for debt restructuring. As of June 30, there was no available commitment under the facility, though $31.1 million of the borrowings were letters of credit. Customers include most of the U.S. intelligence agencies and military services and a number of foreign governments.
Moody's Chops Tools Co., Shoots Down Ammo Biz