Moody's downgrades Southern Graphics

Moody's Investors Service said it downgraded the ratings on Southern Graphics Inc., including its corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD.

The ratings for its senior secured first-lien credit facilities also were downgraded to B2 from B1 and the ratings on its senior secured second-lien credit facility to Caa2 from Caa1.

The outlook is stable.

The downgrades reflect an expectation for continued pressures on Southern Graphics' organic revenues and earnings within North America, resulting in a debt-to-EBITDA ratio of higher than 6.5x over the next 12- to 18-months, Moody's said.

The ratings also consider the company's high leverage and a relatively small revenue base in a challenging industry environment, the agency said.

Moody's said it expects modest continued organic revenue declines over the next 12- to 18-months, but its EBITDA impact will be partially offset as the company realizes savings from cost reduction initiatives.

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