Moody's lowers Heckler & Koch

Moody's Investors Service said it downgraded Heckler & Koch GmbH's corporate family rating, probability of default rating and the rating on its €295 million senior secured notes due 2018 to Caa2 from Caa1.

The outlook remains negative.

The action reflect an increased concern that Heckler &Koch's cash flow generation and available liquidity sources will not be sufficient to support its operating needs and debt-service requirements on its €295 million senior secured notes due 2018 in the intermediate term, Moody's said.

In the absence of long-term committed credit lines, the group's liquidity sources are limited to cash on balance sheet of about €22 million per Dec. 31, 2011, the agency said.

Moody's said it considers the company's capital structure and persisting high leverage to be unsustainable without a capital injection or long-term committed credit line and there is limited time to accomplish this in light of the €28 million annual interest burden.

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