Moody's cuts Schefenacker notes to Ca

Moody's Investors Service said it downgraded the corporate family rating of Schefenacker AG to Caa2 from Caa1 and the rating on the company's senior subordinated notes to Ca from Caa3. The rating for the €205 million senior secured facility was affirmed at Caa1.

The outlook remains negative.

The downgrade reflects the increased likelihood of a debt restructuring following the company's announcement of the engagement of an adviser specialized in financial restructuring, the agency said. It is Moody's expectation that a reorganization of the company's capital structure is imminent in the absence of a material injection of additional funds, given recent deterioration in operating performance and cash generation as well as the limited liquidity resources available.

Moody's said the negative outlook reflects continuing uncertainty as to whether Schefenacker can restore its financial flexibility, avoid a filing for insolvency proceedings and stem the erosion in its operating performance, as well as uncertainty about recovery values in the potential event of a default.

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