Moody's drops Century Aluminum to Caa3

Moody's Investors Service said it downgraded Century Aluminum Company's corporate family and probability-of-default ratings to Caa3 from B2, 1¾% guaranteed convertible notes due 2024 to Ca (LGD4, 62%) from B3 (LGD4, 66%) and 7½% guaranteed senior global notes due 2014 to Ca (LGD4, 62%) from B3 (LGD4, 66%). This concludes the review for downgrade initiated on Dec. 17.

The outlook is negative.

The actions reflect concerns about the company's overall liquidity profile during what could be a prolonged downturn in the global aluminum industry, according to the agency.

Moody's said it believes that the high cost domestic operations are incurring substantial operating losses and are unlikely to return to profitability over the intermediate term.

The Caa3 corporate family rating anticipates that operating cash flow generated from the aluminum smelter in Iceland is unlikely to be sufficient to support ongoing operations on a sustained basis, the agency said.

Ratings consider Century's shrinking business profile and expectation that the current capital structure may be unsustainable in light of the current operating and financial challenges, Moody's said.

Ratings reflect the company's significant balance sheet cash and the low-cost operation in Iceland, the agency noted.

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