Moody's downgrades Wornick

Moody's Investors Service said it downgraded the Wornick Co.'s corporate family and probability-of-default ratings to Ca from Caa1, downgraded its senior secured notes to Ca (LGD4, 59%) from Caa1 and affirmed the speculative grade liquidity rating at SGL-4.

This concludes the review for downgrade begun on Nov. 15, and the outlook is negative.

The agency said the downgrade is primarily the result of increasing concerns regarding liquidity and Wornick's ability to remain in compliance with the most restrictive financial covenants prescribed by its revolving credit facility or to obtain waivers for these covenants. Moody's level of concern about Wornick's ability to comply with covenants has been elevated to doubtful. In addition, the agency cited the company's recent exclusion from participation in an add-on request relating to a key U.S. Department of Defense contract as illustrative of the difficult operating environment the company faces at a time when liquidity is critical.

The negative ratings outlook reflects continued uncertainty surrounding the adequacy of Wornick's near-term cash-generating capability and its ability to meet its scheduled July 2007 coupon payment, Moody's said, adding that Wornick has struggled financially since the beginning of 2006 and is expected to continue to do so for the near term.

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