Moody's Investors Service lowered the rating of Aviation Sales Company's $75 million senior secured credit facility to Caa1 from B1 because of the company's losses in 2000. The company had to borrow $10 million from a financial institution in February to pay for working capital needs and the $6.7 million semi-annual interest payment on the $165 million senior subordinated notes due on Feb. 15. The company reported a net loss of $11.6 million on revenue of $388 million in 2000. Also factored into the rating was the company's decline in revenue of $33.7 million in 2000, partly a result of reduced orders from existing customers due to concerns with the company's financial status. The credit is secured by substantially all tangible and intangible assets of the company, a factor which supports the rating.
* Moody's downgraded Eagle-Picher Holdings' senior secured credit facility because of deteriorating operating cash flow performance. Approximately $282 million of senior secured debt is affected. The Ohio-based company manufactures products for the automotive, defense, aerospace, construction and other industrial markets. The rating also factors the company's need to effectively manage the business to the goal of meeting bank covenants. Moody's is concerned that the potential exists for covenant violations for as early as the second quarter ending May 31. Any defaults could threaten Eagle-Picher's ability to utilize the approximately $60-$70 million of availability that currently exists under the company's revolver. The rating positively reflects that Eagle-Picher has successfully diversified its automotive customer base over the past few years.
* Moody's raised its ratings for coal producer Arch Coal, Inc.'s $600 million senior secured revolving credit facility and an $88 million bank term loan to Ba1 from Ba2, and raised its rating for Arch Western Resources's $675 million secured non-amortizing term loan due in 2003 to Ba1 from Ba2. The increased ratings reflect potentially higher profit margins that Arch Coal may experience due to a favorable outlook for coal prices in the near future. Moody's points to growing electricity demand nationwide and energy shortages in the West as drivers supporting higher coal prices. In addition to price changing for the sector, internally the company has become less leveraged. Moody's notes the company applied $306 million in net proceeds from a recent stock offering to pay off outstanding debt.
* Alaris Medical Inc.'s $180 million senior secured credit facility was downgraded to B2 from B1 reflecting the company's credit profile and performance through FYE 2000, according to Moody's Investors Service. The company's growth has been stunted by competitive and cost containment pressures in recent years. Moody's notes that revenues have remained relatively stagnant as a result of declining prices, adverse foreign exchange movements, and a loss of market share. Alaris is a leading provider of infusion systems and patient monitoring products.