Moody's downgrades Ginn-LA

Moody's Investors Service said it lowered the ratings of Ginn-LA CS Borrower, LLC and that of its co-borrower, Ginn-LA Conduit Lender, Inc., including the corporate family and probability-of-default ratings to Caa1 from B2, the senior secured first-lien bank credit facility to B3 (LGD3, 37%) from B (LGD3, 40%) and the senior secured second-lien term loan to Caa3 (LGD5, 88%) from Caa1 (LGD6, 91%).

The ratings were placed on review for further downgrade.

The agency said the downgrades were triggered by the significant slowdown of lot closings in 2006, the weakening of the residential and vacation housing markets and the company's need to raise additional capital to fund key infrastructure and amenities costs.

The ratings remain on review for further downgrade because of the uncertainty surrounding the company's possible success in securing additional capital and in renegotiating its bank agreement, Moody's said. Because of the weak 2006 operating performance and the poor 2007 outlook for lot sales, the company will not be able to pay down enough debt to be in compliance with some of the terms of its existing credit agreement. As a result, the company expects to obtain from its lenders a 60-day extension for the delivery of its 2006 audits and a 60-day extension for the delivery of the appraisal update for the first quarter of 2007.

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