Moody’s drops LSB, notes to Caa1

Moody's Investors Service said it downgraded LSB Industries, Inc.'s corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and the $375 million guaranteed senior secured notes to Caa1 from B3.

The actions reflect the combined negative effects of the nitrogen fertilizer industry downturn and LSB's continued operating challenges that have reduced production, increased costs and resulted in earnings losses, Moody’s said. While new nitrogen capacity is absorbed into the market through 2018, low nitrogen fertilizer prices will continue to compress margins and leave little room for operating inconsistency, downtime, or additional costs without resulting in negative free cash flow.

LSB's speculative grade liquidity rating was changed to SGL-3 from SGL-4 due to the proceeds from the climate control business divestiture.

The outlook is stable. This concludes the review commenced on Oct. 14.

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