Moody's drops Landmark

Moody's Investors Service said it has downgraded the corporate family and probability of default ratings of Landmark FBO, LLC to Caa1 from B3.

The outlook is negative.

According to Moody's, the downgrade reflects several developments: 1) weaker than expected earnings from lower general aviation volumes; 2) extra costs the company faced in implementing its upgraded management information systems; 3) use of the company's revolver to fund acquisitions which has decreased financial flexibility.

The Caa1 family rating incorporates greater than expected leverage and a diminished liquidity profile, only partially mitigated by progress that Landmark has made toward cutting expenses to weather the soft demand period, the agency said.

Further, the company's diminished liquidity profile stems from increased potential for financial ratio covenant breaches in 2009 and the company's use of its revolver to fund acquisitions, Moody's noted.

Other affected ratings included the company's $30 million first-lien revolver due 2014 to B2, LGD 3, 32% from B1, LGD 3, 31%.; $188 million first-lien term loan due 2015 to B2, LGD 3, 32% from B1, LGD 3, 31%; and $120 million second-lien term loan due 2016 Caa2, LGD 5, to 83% from 82%.

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