Moody's downgrades Eurofresh

Moody's Investors Service said it downgraded Eurofresh, Inc.'s corporate family rating to Caa3 from Caa2 and probability-of-default rating to Ca from Caa3.

Also downgraded were $170 million senior unsecured discount notes due 2013 to Caa3 (LGD3, 40%) from Caa2 (LGD2, 29%) and $44.17 million senior subordinated discount notes due 2014 at C (LGD5, 83%) from Ca (LGD5, 71%).

The outlook remains negative.

Moody's said the downgrade reflects eroding operating profit margin in the third fiscal quarter, concerns about liquidity and the company's need to obtain an amendment and waiver under covenants in its bank agreement.

The issuer's Caa3 corporate family rating reflects the company's weak financial metrics, tight liquidity and limited financial flexibility, and the increased possibility that the company may be unable to meet its scheduled debt service requirements, the agency said, as well the company's small size and narrow product focus.

The rating also considers the company's market position, with the possibility of good recovery value for secured debt in case of default, the agency said.

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