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Moody's downgrades Key Energy
Moody's Investors Service said it downgraded Key Energy's ratings in response to the company's announcement that it received a notice of breach from the trustee of the senior notes.
Moody's said it downgraded Key's senior implied rating to B1 from Ba3, its senior unsecured issuer rating to B2 from B1, its $150 million 6.375% senior unsecured notes due 2013 to B1 from Ba3, its $18.7 million 5% convertible subordinated notes due 2004 to B3 from B1, its $175 million 8.375% senior unsecured notes due 2008 to B1 from Ba3 and its $100 million add-on to its 8.375% senior unsecured notes due 2008 to B1 from Ba3.
Moody's said while there has been no new information regarding the status of Key's audit completion and Securities and Exchange Commission filings and at this time there do not appear to be any indications of material sustained weakness in the company's core business, the downgrade reflects the potential implications of the notice itself and the need to obtain noteholders' consent. Failure to obtain the consent within 60 days could set off a liquidity crunch since the company currently does not possess the ability to meet these obligations if accelerated.
The ratings remain on review for further downgrade while the company completes its audit, its internal investigation and responds to the SEC inquiry, the agency added. The review will also incorporate any additional information flow issues that may surface.
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