Moody's cuts Werner ratings

Moody's Investors Service said it lowered the ratings of Werner Holding Co. (DE) Inc., including its senior implied rating to B1 from Ba3, its senior secured bank credit facility to B1 from Ba3, and the rating on its senior subordinated notes to B3 from B2.

The outlook was changed to negative from stable.

Moody's said the downgrades reflect the company's recent announcement that it will discontinue supplying any of the Werner branded products to The Home Depot during the first quarter of 2004. This follows the previous announcement on Oct. 17 that Home Depot would stop purchasing aluminum and fiberglass stepladders from the company.

The negative outlook reflects Moody's expectation that covenant compliance in the coming year will be challenging as the company seeks new markets to replace the lost Home Depot business.

At the same time, Werner announced that it has entered into a long-term strategic alliance with Lowe's Cos. such that Lowe's will become the exclusive source for Werner branded climbing equipment in the warehouse home center channel.

The agreement with Lowe's, which accounted for about 18% of Werner revenues in 2002, may offset a portion of the lost business with The Home Depot, Moody's said.

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