Moody's cuts American Pacific

Moody's Investors Service said it downgraded American Pacific Corp.'s corporate family rating and probability of default rating to B2 from B1, $110 million guaranteed senior unsecured notes due 2015 to B3 (LGD 4, 57%) from B2 (LGD 4, 58%) and speculative grade liquidity rating to SGL-4 from SGL-3.

The outlook is stable.

The agency said the downgrades follow disappointing June quarter results and news that the company was reducing its revenue and earnings guidance for 2010.

The downgrade reflects expectations for lower earnings generation and potential for earnings volatility to impact liquidity, Moody's said.

The ratings also consider the decreasing cushion the company has with respect to its financial covenants under its revolving credit facility and the potential that it will not be able to comply with the interest coverage and leverage covenants for the September quarter, the agency said.

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