Moody's rates Quality Distribution notes Caa2

Moody's Investors Service said it assigned a Caa2 rating to Quality Distribution LLC's proposed senior unsecured notes due 2012. The outlook is stable.

The purpose of the proposed notes offering is to repay about $82 million of existing debt, including a prepayment of about $70 million of the company's $138 million term loan B due 2009. In conjunction with this offering, the company has proposed amendments to its senior secured bank credit facility to provide the company with additional room under its financial covenant restrictions.

In addition, Moody's affirmed Quality Distribution's Caa1 rated amended revolving credit facility, Caa3 rated $125 million senior subordinated notes due 2010, Caa1 senior implied rating and Caa2 senior unsecured issuer rating.

Moody's said the ratings continue to reflect Quality Distribution's weak operating profits and cash flow experienced in 2004, resulting in weak financial metrics, including fixed charge coverage and cash flow to debt, despite a generally favorable market for transportation services.

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