Moody's drops Foamex

Moody's Investors Service said it lowered the ratings for Foamex LP and Foamex Capital Corp. and their outstanding debt obligations.

The outlook remains negative.

Affected ratings include the $148.5 million of 9.875% senior subordinated notes due 2007 from Caa2 to Ca, $51.6 million of 13.5% senior subordinated notes due 2005 from Caa2 to Ca, $300.1 million of 10.75% senior secured notes due 2009 from B3 to Caa2 and corporate family rating from B3 to Caa2.

The downgrade reflects, in Moody's view, the increasing likelihood of a potential restructuring of the company's debt obligations over the near term, increasing the possibility that the 13.5% senior subordinated notes will not be repaid at maturity on Aug. 15.

The agency said the operating pressures have been exacerbated by the company's high debt load and tight liquidity conditions.

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