Moody's cuts, withdraws Maxxim Medical

Moody's Investors Service downgraded and simultaneously withdrew the ratings of Maxxim Medical, Inc. including cutting its $310 million senior secured credit facilities to Ca from Caa1 and $145 million senior subordinated discount notes due 2009 to C from Caa3.

Moody's said the downgrade follows the company's announcement on Feb. 12 of its filing for Chapter 11 reorganization and reflects the anticipated recovery for creditors.

Maxxim's performance has been deteriorating in recent years due to strong pricing and competitive pressures. A sharp decline in profitability and cash flow has left the company unable to service the significant debt taken on during the company's 1999 recapitalization.

Moody's noted that Maxxim has negative tangible equity and limited tangible assets. However, based on an enterprise value analysis, Moody's believes that the holders of the senior secured bank debt may recover a portion of their investment. The senior subordinated debt holders, on the other hand, are likely to experience a significant loss.

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