Moody's cuts Drummond outlook to negative

Moody's Investors Service said it downgraded the outlook for Drummond Co., Inc. to negative from stable.

Moody's also affirmed the company's Ba3 corporate family rating, upgraded the senior secured rating to Ba2 (LGD3, 38%) from Ba3 and lowered the senior unsecured rating to B2 (LGD5, 83%) from Ba3. Moody's rates the company's overall probably of default at Ba3.

The outlook reflects Drummond's recent operating challenges and reduced financial performance. The agency also cited a possible one-year delay in production from the El Descanso mine, uncertainty about the company's ability to meet production targets, concerns associated with the company's planned recovery at Shoal Creek and heightened concentration risk of its coal mining operations.

The negative outlook also reflects the significant risks concerning Drummond's various expansion and development projects in Colombia and certain commitments for the next two to three years, which Moody's expects will be partly financed by debt, the agency said.

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