Moody's downgrades Syratech

Moody's Investors Service said it downgraded the debt ratings of Syratech Corp., including the company's senior implied rating to Caa3 from B3, senior unsecured issuer rating to Ca from Caa1, and the rating for the $118.3 million senior notes due 2007 to Ca from Caa1.

The outlook remains stable.

Moody's said the downgrade follows the company's announcement through public filings that it does not expect to be in compliance with its bank covenants as of Dec. 31, 2004 and has hired Peter J. Solomon Co. LP to assist in negotiations with the company's lenders and other debt holders in connection with the company's exploration of financing and other alternatives.

The downgrade reflects the company's excessive leverage, its weak operating and credit metrics, and its limited liquidity, as well as Moody's expectation of modest recovery rates in a restructuring scenario.

Syratech has a $70 million revolving credit facility due March 2006 (with a $30 million sub limit for letters of credit) secured by a first priority lien on the inventory and receivables of the company as well as certain guarantees. The revolver is not rated by Moody's.

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