Moody's Investors Service lowered the senior secured debt facility of IMC Global Inc. to Baa3 from Baa2 following the company's announcement that earnings for the fourth quarter will be substantially below anticipated levels. Citing further weakness in the market for phosphate fertilizers and higher raw material and energy prices, Moody's believes that IMC will be unable to reduce debt to levels which support the Baa2 ratings within the next 12 to 18 months. The rating also considers that the company will indefinitely close all phosphate fertilizer production at its Louisiana facilities. Moody's anticipates changing the outlook to stable once the bank group has finalized the amendment to the credit facility and the company has a more definitive indication of the timing of asset sales. The Lake Forest, Ill.-based company produces phosphate and potash fertilizers and animal feed ingredients. J. Bradford James, cfo, did not return calls for comment. Bank of America leads the company's $550 million bank deal, according to Capital DATA Loanware. • Moody's notched down the senior unsecured debt ratings of Caraustar Industries to Baa2 from Baa1, reflecting expectations that industry conditions for the company's core recycled paperboard products will remain relatively soft. Acquisitions and elevated capital spending have pushed debt higher over the past two years. This, combined with higher raw materials and costs and lower volumes have resulted in materially weaker debt protection measurements than previously anticipated. Along with ongoing cost improvement and the elimination of below market contracts at the Sprague mill, this should provide a modest boost to operating income and cash generation by the end of the year. Caraustar, headquartered in Austell, Ga., is one of the largest manufacturers of recycled paperboard in the country. A company spokeswoman did not return calls for comment. BT Alex. Brown NationsBank and SunTrust Bank are the mandated arrangers to the company's $400 million bank facility.
• Moody's assigned CSK, Inc.'s amended $125 million credit facility a Ba3 rating because lower-than-expected sales have kept leverage high. The agency estimates that debt to EBITDA will be four times. Amortization requirements of nearly $54 million for the fiscal year ending January 2002, with the subsequent year's requirement increasing to $90 million, will weaken coverage of net cash flow to required debt service. The outlook remains negative, despite Moody's belief that CSK's future capital expenditures will be lower. The rating is supported by the fact that CSK's productivity will improve modestly and that the company will be able to reduce debt slightly. CSK, based in Phoenix, is an auto-parts retailer. A company spokesman did not return calls seeking comment. Chase Manhattan Bank leads the deal.
• Moody's downgraded Albertson's Inc.'s senior unsecured credit facilities to Baa1 from A2 because of ongoing profitability pressures. Comparable store sales decreased 0.2% in the third fiscal quarter. Increased competition from new companies has forced Albertson's to slash capital expenditures by $1.5 billion instead of $500 million over the next five years. Initiatives are already under way to reduce costs by $250 million during this year alone. Moody's notes that the results of these initiatives might not be achieved in the near future. Albertson's, headquartered in Boise, Idaho, is a national retail food and drug store chain. A company spokesman declined to comment. Bank of America and Wachovia Bank are the mandated arrangers of Albertson's $1.85 billion credit facility, according to Capital DATA Loanware.
• Standard & Poor's lowered the rating on RailWorks Corp.'s $200 million loan to B from BB- because of the company's increased leverage. Total debt to EBITDA jumped up to 5.75 times for the quarter ending Sept. 30, 2000. The company violated third quarter 2000 covenants, which had to be revised, and received waivers from its bank group. The facility was subsequently reduced by $50 million. S&P's acknowledges that potential asset sales should bring down leverage close to five times. The agency also notes that fixed-capital requirements are modest, yet working capital needs may increase over time. Bank of America and First Union are co-arrangers. Michael Azarela, cfo of the rail system company in Baltimore, did not return calls.
• S&P's also lowered the rating on Quality Stores' $405 million senior secured credit facility to B- from B citing the company's poor financial performance. Weaker-than-expected third quarter earnings and cash flow hampered credit protection measures. Comparable store sales fell 17.6% compared to the third fiscal quarter of 1999. EBITDA on a trailing 12-month basis covered interest nearly 1.85 times, while EBITDA reached 5.6 times. Denny Starr, cfo of the farming goods retailer in Muskegon, Mich., did not return calls seeking comment. Bank of America and FleetBoston Financial are the mandated arrangers.