Moody's rates Columbus McKinnon notes B3

Moody's Investors Service assigned a B3 rating to Columbus McKinnon Corp.'s proposed $100 million senior secured notes and confirmed its existing ratings including its $200 million 8.5% senior subordinated notes due 2008 at Caa1. The outlook is negative.

Moody's said the ratings reflect continuing depressed demand for the company's material handling products amid the protracted cyclical downturn in the manufacturing sector.

The ratings also reflect the considerable deterioration in the company's operating performance and its weakened credit profile.

On the other hand, the ratings recognize the company's improved liquidity position as a result of this refinancing transaction and its ability to maintain leading market position and strong brand recognition through the downturn.

The negative outlook reflects uncertainties over the length of the economic downturn, as well as challenges the company faces in stabilizing its operations.

S&P rates Columbus McKinnon notes B-

Standard & Poor's assigned a B- rating to Columbus McKinnon Corp.'s proposed $100 million senior secured note offering due 2010 and confirmed its existing ratings including its subordinated notes at CCC+. The outlook remains negative.

S&P said the ratings reflect Columbus McKinnon's below-average business profile despite leading (No. 1 or No. 2) niche market positions within the material handling, lifting, and positioning products industry and a very aggressive financial profile, including subpar credit protection measures and limited liquidity.

Many of the company's niche segments are highly fragmented and very competitive, S&P noted.

Columbus McKinnon continues to be negatively affected by soft end market conditions, which have significantly reduced profitability and cash generation.

In fiscal 2003, EBITDA declined by approximately 25%, to about $43 million, from about $61 million a year earlier, and is down more than 60% from its peak in 1999. At fiscal year-end 2003 total debt to EBITDA was slightly over 7x, S&P said.

The rating agency added that it expects that leverage will trend toward the 6x area during fiscal 2004 as market conditions and cash generation improve. Longer-term, this ratio should strengthen to about 5x.

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