Moody's: Drummond outlook stable

Moody's Investors Service said it changed the outlook for Drummond Co., Inc. to stable from negative and affirmed its Ba3 corporate family rating, Ba2 senior secured rating and B2 senior unsecured rating.

The agency said the stabilization of the outlook reflects Drummond's advancement of the El Descanso mine, the expectation that capital expenditures will decline in 2010 with the completion of El Descanso and improved operating performance.

Drummond's Ba3 corporate family rating considers the concentration of revenue and cash flow in one mining district in Colombia, with its attendant geological, weather-related and workforce challenges; the private, family-controlled nature of Drummond; its complex corporate structure; and the minority interest of approximately 20% that is held by related parties in most of the significant operating subsidiaries, Moody's said.

The rating is supported by Drummond's large reserve base of high-BTU, low-sulfur coal, its relatively moderate leverage for the rating category and the ability to shift exports of Colombian coal to more attractively priced coal markets, the agency said.

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