Moody's Investors Service notched down the rating on Bethlehem Steel's $600 million inventory secured bank facility to Ba3 from Ba2 because of the market's impact on the company's operating performance. Operating margins have declined to negative 2.5% for the third quarter from a previously narrow 2.4% in the second quarter. Debt protection measures are weaker, with earnings before interest, taxation, depreciation and amortization (EBITDA) interest coverage at 1.4 times, down from 4 times for the first half last year. Furthermore, prices have fallen along with demand, while imports have been reaching record levels. Moody's acknowledges that the company is reducing costs and cutting capital expenditures. J.P. Morgan leads the deal, according to Capital DATA Loanware. A company spokesman for the Bethlehem, Pa.-based steel producer declined to comment. • Moody's lowered Quality Distribution's $360 million bank facility to B1 from Ba3 after the company reported a third quarter revenue decrease of 4.9% to $149 million. Earnings before interest, taxation, depreciation and amortization (EBITDA) for the nine months ended Sept. 30 last year was $56 million versus $62 million for the same period in 1999. Leverage is also high at 5.3 times, and adjusted last 12 months EBITDA to interest coverage was 2 times. The rating considers, however, debt reduction of $17 million to $417 million since year-end 1999. Credit Suisse First Boston, BT Alex. Brown and Salomon Smith Barney are the mandated arrangers, according to Capital DATA Loanware. Richard Brandewie, cfo of the bulk chemical transporter in Tampa, Fla., did not return calls.
• Instron Corporation had its $80 million credit facility marked down to B2 from B1 after Moody's noted the company's weak operating performance. For the nine months ending Sept. last year, revenues decreased by 13% to $109 million. Earnings before interest and taxation (net of non-recurring charges) was $3.6 million versus $8.5 million for the same period in 1999. The company's total debt measured $112.4 million, 15.6 times last 12 months' adjusted earnings before interest, taxation and amortization. Tighter covenants and waivers received for the bank agreement for the first two quarters last year support the rating. Instron Corporation is located in Canton, Mass., and designs structural testing systems for quality control. Company spokespeople declined to comment. National City Bank leads the loan.