Moody's downgrades Viskase

Moody's Investors Service said it downgraded Viskase Cos., Inc.'s corporate family and probability-of-default ratings to Caa1 from B2, downgraded its $90 million 11½% senior secured notes due 2011 to B3 (LGD3, 37%) from B1 (LGD3, 32%) and changed the outlook to stable from negative.

The agency said the downgrade reflects a deterioration in the company's financial metrics, a weak liquidity profile, negative affects from better-capitalized competitors and a reduction in capacity stemming from moving the company's Indiana manufacturing facility to Mexico.

Sustained negative cash flow generation and a modest cash balance have resulted in an increased reliance on a $20 million committed revolver to fund peak working capital needs and capital expenditures, Moody's said, and increased usage of the revolver triggers restrictive financial covenants and is limited by the borrowing base of inventory and accounts receivables.

The agency said that the rating is further limited by the absence of contracted business for the majority of the company's small revenue base, reliance on predominantly one product line and intense competition, but benefits from the company's global presence and established clientele.

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