Moody's downgrades Burlington debt
January 25, 2001,
NEW YORK — In a move that could cost Burlington Industries more money in the form of higher borrowing costs, Moody's Investor Service has downgraded $1 billion in Burlington debt, citing the company's "weak operating performance in almost all of its business units."
The debt rating service began its review of the textiles giant on Oct. 31 and concluded it last week, taking note of the company's "weak cash flow generation coupled with very high leverage and weak interest protection measurements." In addition, Moody's pointed to "a weak return on assets necessitating further asset restructuring."
According to Moody's, "Industrywide challenges and overall economic conditions may hinder the company's turnaround." The debt rating agency said its concerns "also include Burlington's ability to meet its fixed charge coverage this year, inclusive of rents, and the current portion of long-term debt."
The affected ratings include $600 million in senior secured revolving credit, downgraded from B1 to B3; $150 million in 7.25 percent notes due in 2027, downgraded to Caa2 from B1; $150 million in 7.25 percent notes due 2005, downgraded to Caa2 from B1; and $100 million senior unsecured shelf registration, downgraded to Caa2 from B1.
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