Moody's drops Aventine to Caa2

Moody's Investors Service said it downgraded Aventine Renewable Energy Holdings, Inc.'s corporate family and probability-of-default ratings to Caa2 from B3 and its $300 million senior unsecured notes due 2017 to Caa3 (LGD5, 78%) from Caa1 (LGD5, 77%).

Moody's said the downgrade reflects the continued poor ethanol industry conditions that have contributed to lackluster cash margins and Aventine's inability to secure alternative sources of financing to improve its liquidity.

The speculative grade liquidity rating of SGL-4 was confirmed.

The outlook is negative. This concludes the ratings review commenced September 23, 2008.

According to the agency, the downgrade reflects the low ethanol industry margins that may not allow for sufficient cash flow and liquidity to support Aventine's operating needs as well as debt service requirements.

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