Moody's downgrades Mecachrome

Moody's Investors Service said it downgraded Mecachrome International Inc.'s corporate family and probability-of-default rating to Caa3 from Caa1, senior secured rating to B2 from B1 and senior subordinate rating to Ca from Caa2. The company's SGL-4 liquidity rating was affirmed.

The outlook was negative.

The downgrade follows the company's management changes to deal with significant challenges in aerospace program delays, a challenging economic backdrop and a sharp deterioration in the auto sector, according to the agency.

Moody's said the company's actions are likely evidence that the challenging operating environment has caused its already weak liquidity position to deteriorate further since its ratings were last downgraded to Caa1 from B2 on Aug. 15.

"The potential for Mecachrome to maintain compliance with its bank covenants has reduced and ongoing tight credit conditions will constrain the company's ability to receive covenant relief and/or gain access to additional external capital needed to funded expected cash consumption," Moody's analyst Darren Kirk said in a statement.

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