Moody's: OfficeMax outlook stable

Moody's Investors Service said it changed OfficeMax, Inc.'s outlook to stable from negative and affirmed the company's corporate family and probability-of-default ratings at Ba2; 7% senior secured notes due 2013 at Baa2; 7½% senior unsecured notes due 2008, 6½% senior unsecured notes due 2010, 9.45% debentures due 2009, 7.35% debentures due 2016, medium-term notes and revenue bonds at Ba3 (LGD4, 69%); and speculative grade liquidity rating at SGL-2.

The stable outlook recognizes the company's improved operating performance as a result of the new management team's turnaround plan, the agency said, which has resulted in improving credit metrics with last-12-month June 30 leverage reducing to 4.3x.

Moody's said the Ba2 rating considers OfficeMax's credit metrics, which are solid for the rating category, and its position as the number-three dedicated retailer of office supplies in the United States in a highly competitive and fragmented segment.

The rating also recognizes that OfficeMax must continue to make progress with its turnaround plan, especially in its logistics and supply chain, and that its margins significantly lag both Staples and Office Depot, the agency said.

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