Moody's cuts Metso to junk

Moody's Investors Service said it downgraded the long-term senior unsecured debt and issuer ratings of Metso Corp. to Ba1 from Baa3. The securities affected by the downgrade include the €1 billion Euro medium-term note program, the €500 million bonds due 2006 drawn under the program and a US$200 million bond due 2007.

The outlook is negative.

Moody's said the rating downgrade reflects Metso's continued weak operating performance in 2003, resulting in depressed margins and cash flows in the company's core businesses, the company's slow pace of implementing its efficiency improvement and cash release strategy, and Metso's high levels of debt relative to weakening operating cash flows.

The negative outlook reflects primarily the execution risk related to Metso's strategy. To support the Ba1 rating, management would be expected to implement substantially all its targeted €100 million cost savings during 2004 and to complete asset disposals to reduce net debt to more manageable levels in the context of current and expected operating cash flows, the agency said.

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