Moody's cuts ACIH to SGL-4, may downgrade Atrium

Moody's Investors Service said it downgraded the speculative grade liquidity rating of intermediate holding company ACIH to SGL-4 from SGL-3 and placed the ratings of ACIH and Atrium Cos. Inc. under review for possible downgrade, including ACIH's B2 corporate family and probability-of-default ratings and Caa1 $174 million senior discount notes due 2012 (LGD6, 90%) and Atrium's B1 $378.5 million senior secured term loan B due 2012 (LGD3, 37%) and B1 $50 million senior secured revolving credit facility due 2011 (LGD3, 37%).

Moody's said its downgrade of the company's speculative grade liquidity rating was driven by concerns over potential covenant violations resulting from projected weak cash flow generation relative to debt and fixed charge burdens.

The review for possible downgrade of the remaining ratings was prompted by Moody's belief that the company's projected liquidity position is weak; the company's end markets are continuing to deteriorate and there may be a need for future covenant relief, new equity capital or both. The action is also driven by concerns surrounding the current and anticipated impact of the homebuilding slowdown on Atrium's sales and cash flow generation.

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