Moody's may downgrade Dresser

Moody's Investors Service said it placed Dresser Inc.'s Ba3 corporate family rating, Ba3 senior secured tranche C term loan due 2009, B1 senior unsecured term loan due 2010 and B2 senior subordinated notes due 2011 under review for possible downgrade as a result of the company's inability to file its 2005 10-K report by the March 31 deadline. The review is also prompted by concerns about the effectiveness of Dresser's internal controls and continued high leverage, despite recent debt reduction efforts.

The filing delay is the result of the need to address certain accounting issues, the company's recent focus on completing prior-period reports and the accounting effort associated with the November sale of two of its businesses, the agency said.

The filing delay represents a continued inability for Dresser to file its financial statements with the Securities and Exchange Commission and Moody's believes that ongoing financial statement filing delays have created significant management distractions. As a result of the filing delay, Dresser will be in violation of the financial reporting covenant under its senior secured credit facility. If Dresser is unable to obtain waivers from its secured lenders, the lenders will have the option to accelerate payment.

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