Moody's rates Ozburn revolver B1

Moody's Investors Service said it assigned a B1 (LGD2, 24%) rating to Ozburn Hessey Holding Co., LLC's $25 million senior secured revolving facility due May 2012 and affirmed its corporate family and probability-of-default ratings at B3 and its $227 million senior secured term loan due 2012 at B1. The loss-given-default assessment assigned to the term loan was changed to LGD2 (24%) from LGD3 (33%).

The outlook remains negative.

The company recently amended its credit facility, extending the expiration date to May 2012 from August 2010 and reducing the revolver commitment to $25 million from $40 million.

The agency said the corporate family rating affirmation reflects proactive steps the company has taken to reduce fixed costs, Moody's expectation that the de-stocking trend by customers has likely stabilized and should enable better volumes later in 2010, existing interest coverage measures that could sustain the B3 rating and steps the company has taken to bolster its financial reporting capabilities.

The negative outlook reflects potential for a financial ratio covenant breach due to an aggressive step down schedule through 2011 as well as limited free cash flow prospects as a result of low earnings and the possibility that a lack of meaningful volume gains later in 2010 could sustain the low earnings level, Moody's said.

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