Moody's downgrades Kamps

Moody's Investors Service said it downgraded the senior implied rating of Kamps AG and its subsidiaries to B2 from B1 and placed all ratings under review for further possible downgrade.

Ratings lowered include the unsecured issuer rating to B2 from B1, the €240 million 8.0% senior notes due 2005 to B2 from B1, and the €320 million 8.5% senior notes due 2009 to B2 from B1.

Moody's said the ratings actions were prompted by (i) continued weak operating performance at Kamps' retail division in Germany following the operating results recently reported for the first half 2004, (ii) the impact of intensified competition coupled with weakness in the German macroeconomic climate, (iii) growing concerns as to Kamps' ability to improve cash flow metrics and deleverage the business in line with Moody's expectations, (iv) Moody's concerns regarding potential challenges the company may face in implementing an effective restructuring program required to derive sufficient cost savings and production efficiencies to underpin a significant recovery in cash flow generation and (v) refinancing risk from the company's maturing debt in September 2005.

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