Moody's Investors Service downgraded IMC Global Inc.'s senior unsecured debt ratings to Ba2 from Ba1 and Moody's also withdrew the Ba3 rating on the company's existing $800 million credit facility.
The ratings downgrade on IMC's senior existing unsecured debt reflects the structural subordination of these bonds to the new $1.1 billion financing package that will be completed shortly. The ratings downgrade also reflects the company's weakened financial condition due to the inability of IMC to significantly reduce debt by divesting non-core assets. In order to improve its liquidity, the company is planning to establish a new $500 million senior secured credit facility and issue $500 million of senior unsecured debt.
* Moody's lowered the ratings of Washington Group International's senior secured credit facility to Caa3 from Caa1. The company has approximately $400 million outstanding under its bank credit facilities. The rating action reflects continued severe near-term liquidity problems due to substantial cost overruns and negative cash flows associated with certain projects acquired through the Raytheon Engineers & Constructors acquisition, as well as ongoing disputes regarding purchase price adjustments with Raytheon relating to this acquisition.
* Coast Hotels and Casinos' senior subordinated debt was upgraded to B2 from B3 due to the success of the local Las Vegas market as well the expectation that the company's expansion strategy can be accomplished primarily with internally generated cash flow. The company has approximately $425 million in debt. Additionally, the Moody's upgrade reflects strong fundamental demand and growth prospects of the local Las Vegas casino market. The company hs almost doubled its revenues since 1997 and has tripled its EBITDA.
* Moody's downgraded the long-term debt rating of Sierra Pacific Resources' senior unsecured credit facility to Baa3 from Baa2 and placed a stable outlook on the new rating level. Approximately $3.1 billion in debt is affected. The downgrade reflects the poor financial results of the company and its utility subsidiaries in 2000 and the early part of 2001. The weak performance is primarily attributable to fuel and power purchase costs in excess of allowed rates charged to retail customers. According to the rating, near-term cash flow pressure is inevitable as the companies will be required to fund a significant level of cost deferrals and investments in additional transmission capacity.