Moody's drops DS Waters

Moody's Investors Service said it downgraded the ratings of DS Waters Enterprises, LP based on its concern regarding the adequacy of collateral protection in a distressed scenario for debt holders, which has significantly declined as a result of weak operating performance and extremely high financial leverage. The outlook remains negative.

Moody's lowered the company's corporate family rating to Caa3 from Caa2, its $480 million senior secured credit facility, consisting of a $100 million revolver due 2008 and $380 million term loans outstanding due 2009, to Caa3 from Caa2.

The Caa3 ratings are based on Moody's estimates of the value of the business on a going concern basis, as well as in a liquidation scenario. The ratings reflect the likelihood that the debt holders will incur significant losses in a distressed scenario, the agency said.

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