Moody's cuts Hines Nurseries

Moody's Investors Service said it lowered Hines Nurseries, Inc.'s corporate family and probability-of-default ratings to Caa2 from Caa1 and the $175 million senior unsecured rating to Caa3 (LGD4, 68%) from Caa2 (LGD5, 71%).

The outlook was changed to negative from stable.

According to Moody's, the downgrade reflects a reversal in the trend of improving profitability given a significant decline in operating income for the quarter ended Sept. 30.

The downgrade also considers ongoing business challenges that may prevent the company from improving profitability, including intense pricing pressure and exposure to volatile raw material prices.

More recently, the company saw lower replenishment orders from its key customers, which Moody's said has increased concerns about the potential for default.

Moody's also noted the company's adequate liquidity position supported by recent asset sales.

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