Moody's downs OfficeMax

Moody's Investors Service said it downgraded the corporate family and senior unsecured ratings of OfficeMax, Inc. to Ba2 from Ba1 and left these ratings on review for further possible downgrade, confirmed the Baa2 rating on the senior notes due 2013 and affirmed the SGL-2 speculative-grade liquidity rating.

Affected ratings include the corporate family rating, lowered to Ba2 from Ba1, and senior unsecured notes, debentures and medium-term notes, also lowered to Ba2 from Ba1.

Moody's said the downgrade is due to OfficeMax's weak operating performance for the first nine months of 2005, particularly in its retail segment, which is barely profitable, leading to a negative free cash flow profile and increased leverage despite the continued reductions in debt.

The agency added the confirmation of the Baa2 rating on the senior notes, which have been paid down to roughly $17 million, reflects the 106% collateral in the form of the pledge of Aa2 rated securities which are held by a trustee.

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