Moody's cuts K-Sea Transportation view to negative

Moody's Investors Service said it affirmed the B1 corporate family and SGL-3 speculative-grade liquidity ratings of K-Sea Transportation Partners LP, but has changed the outlook to negative from stable.

In Moody's view, while operating conditions for distribution of petroleum products are likely to remain favorable in K-Sea's traditional east coast regional markets as well as in the U.S. West Coast and Alaska markets, which K-Sea recently entered, the company's ongoing re-fleeting requirements and the high dividend payout expected could limit K-Sea's ability to generate free cash flow to improve its financial profile.

The ratings consider K-Sea's modest size, expectations of high capital expenditures for maintenance of the fleet, the limited financing alternatives as a substantial portion of K-Sea's fleet is now pledged, the concentration of revenue among a relatively few customers and the competitive environment in the coast-wise trade, the agency noted.

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