Moody's cuts North American Energy notes to Caa1, loans to B2

Moody's Investors Service said it assigned a B3 rating to North American Energy Partner's pending $60.48 million of senior second secured five-year notes and downgraded its $200 million of 8¾% senior unsecured notes due 2011 to Caa1 from B3, its senior implied rating to B3 from B2 and first secured bank facilities to B2 from B1.

Note proceeds will repay C$61 million of first secured bank debt, fund C$6 million in transaction fees and add C$8 million to cash. The outlook is negative.

Moody's said the downgrades generally reflect the business and heavy funding challenges North American Energy will need to surmount this year to deliver the fiscal 2006 turnaround it expects and the asymmetric risk to the rated debt if that turnaround does not occur.

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