Moody's cuts Pierre Foods

Moody's Investors Service said it downgraded Pierre Foods, Inc.'s corporate family and probability-of-default ratings to B3 from B1.

The agency also downgraded the $40 million senior secured revolving credit facility due 2009 and $227 million senior secured term loan facility due 2010 to B2 (LGD3, 35%) from Ba3 (LGD3, 35%) and the $125 senior subordinated notes due 2012 to Caa2 (LGD5, 87%) from B3 (LGD5, 87%).

The SGL-4 speculative grade liquidity rating was affirmed, concluding the review that began on Sept. 24.

The outlook is negative.

The downgrade reflects the significant decline in the company's earnings and cash flow expectations, higher leverage and the company's need to obtain a waiver and amendment to avoid a covenant default for the quarter ended Sept. 1, according to the agency.

The B3 corporate family rating reflects the company's tight liquidity and limited financial flexibility as well as its small scale and limited diversification, Moody's said.

The company's debt-to-EBITDA ratio is 6.5 times.

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