Moody's puts Domtar on negative review

Moody's Investors Service said it placed Domtar Inc.'s Ba2 senior unsecured debt and corporate family ratings on review for possible downgrade.

The rating action was prompted by Domtar's announcement that it is reviewing its asset portfolio, the agency said, so as to rectify ongoing negative free cash flow resulting from an acceleration in adverse extraneous influences.

Moody's said these include the appreciation of the Canadian dollar relative the U.S. dollar, higher input costs for energy, chemicals and fiber and an unexpected decline in pricing for the company's key output - uncoated, wood-free paper - in response to softening demand and excess capacity.

The company announced the suspension of its dividend and indicated that it would present the market with a comprehensive suite of remedial steps by the end of November, Moody's said.

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