Moody's downgrades Ferro

Moody's Investors Service said it downgraded Ferro Corp.'s $355 million senior unsecured notes and debentures and universal shelf to B1 from Ba1 due to continuing delays in the issuance of audited financial statements. In addition, the agency said it will withdraw Ferro's ratings due to lack of information, though it may reassign ratings to Ferro's notes and bonds once audited financials for 2004 and 2005 are released.

While the company business profile is consistent with a rating in the Ba category, Moody's said the lack of timely audited financial statements creates uncertainty over the company's financial profile. In July 2004, Ferro announced that it had discovered inappropriate accounting entries at its polymer additives business unit and would delay the reporting of its financial results. Ferro's board engaged a forensic audit team and subsequently expanded the scope of the forensic audit to the company's other operations.

Though Ferro amended its $300 million credit facility and $100 million accounts receivable program to provide continued access to these facilities by delaying the requirement for delivery of financial statements until March 31, Moody's is concerned that the company has not yet renegotiated or amended these facilities to permit continued access until the company can deliver its financial statements. Ferro currently has $180 million to 190 million outstanding under these facilities.

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