Moody's may cut Seagate, up Maxtor

Moody's Investors Service said it Seagate Technology HDD Holdings on review for possible downgrade prompted by the announcement of its intention to acquire Maxtor Corp. in an all-stock transaction for $1.9 billion.

Concurrently, Moody's is also placing the ratings for Maxtor under review for a possible upgrade.

Ratings under review for possible downgrade include the Ba1 rating to Seagate's $150 million guaranteed senior secured revolving credit facility due 2007, Ba2 rating to Seagate's $400 million senior notes 8% due 2009, Ba1 corporate family rating to Seagate and SGL-1 liquidity rating to Seagate.

Ratings on review for possible upgrade include the B2 rating to Maxtor's remaining $135 million of the $230 million 6.8% convertible senior notes due 2010, Caa1 rating to Maxtor Corp.'s $60 million 5¾% convertible subordinated debentures due 2012 and B2 corporate family rating to Maxtor.

Moody's said Seagate's existing ratings reflect the company's dominant position in the disk drive industry and incorporate the sector's capital intensity, volatility and the highly commoditized nature of the disk drive business that is characterized by short product life-cycles.

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