Moody's may lower Euramax

Moody's Investors Service said it placed the ratings of Euramax Holdings, Inc. and various European subsidiaries on review for possible downgrade.

The review is based on management's plans to seek an amendment to the company's current senior secured bank credit facilities, which would permit it to refinance its $190 million second-lien bank loan and $110 million of holding company PIK notes with senior subordinated debt at the operating subsidiary.

Moody's placed Euramax's B1 corporate family rating on review for possible downgrade. Also on review are the B1 rated $332 million guaranteed first-lien senior secured term loan due 2012 and the B3 rated $190 million guaranteed second-lien senior secured term loan due 2012.

Moody's also placed on review for possible downgrade Euramax Netherlands BV's B1 rated $118 million guaranteed first-lien senior secured term loan due 2012 and Euramax Holdings Inc.'s B1 rated $80 million guaranteed first-lien senior secured revolver due 2011.

Moody's said its review will focus on the potential increase in operating company financial leverage given the $110 million holding company PIK notes, which Moody's viewed essentially as common equity, will now be refinanced with cash-pay operating company debt. In addition, Moody's will assess management's tolerance for increased financial leverage and the potential constraints on the company's financial flexibility.

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