Moody's lowers American Media loans to B2, notes to Caa3

Moody's Investors Service said it downgraded all ratings of American Media Operations, Inc., including its $60 million senior secured revolving credit facility due 2012 to B2 from B1, $450 million senior secured term loan due 2013 to B2 from B1, $150 million 8 7/8% senior subordinated notes due 2011 to Caa3 from Caa1, $400 million 10¼% senior subordinated notes due 2009 to Caa3 from Caa1 and corporate family rating to Caa1 from B2.

The outlook is negative.

The downgrade reflects Moody's heightened concern regarding the company's continuing high leverage, worsening financial performance (both exacerbated by the costs associated with the restatement of its financial statements and the independent inquiry), squeezed liquidity profile and continued circulation pressure. The agency estimated that American Media's debt exceeded EBITDA by 12 times for the fiscal year ended in March.

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