Moody's drops Champion

Moody's Investors Service said it downgraded Champion Enterprises' corporate family rating to Caa1 from B2, reflecting the continued weakness in the company's core U.S. operations and the outlook for further softness.

The outlook is stable.

The agency said that the following ratings/assessments were affected at Champion Enterprises, Inc.: corporate family rating, downgraded to Caa1 from B2; probability of default, downgraded to Caa1 from B2; $6.7 million 7.625% senior notes, due 2009, downgraded to B2 (LGD2, 27%) from Ba3 (LGD2, 28%); and speculative-grade liquidity rating, affirmed at SGL-4.

The following ratings/assessments were affected at Champion Home Builders Co.: $200 million ($56 million outstanding) senior secured term loan facility, due 2012, downgraded to B2 (LGD2, 27%) from Ba3 (LGD2, 28%); $40 million senior secured revolving credit facility, due 2010, downgraded to B2 (LGD2, 27%) from Ba3 (LGD2, 28%); and $60 million senior secured synthetic letter-of-credit back-up facility, due 2012, downgraded to B2 (LGD2, 27%) from Ba3 (LGD2, 28%).

Moody's added that the downgrade of Champion's corporate family rating to Caa1 reflects its projections for weak cash flow generation, ongoing pressure on the company's core U.S. operations, weak overall profitability, and concerns related to the financial covenants governing the company's first-lien facilities.

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