Moody’s cuts Alliance One to Caa2, notes to Caa3

Moody's Investors Service said it downgraded the corporate family rating of Alliance One International, Inc. to Caa2 from Caa1.

The agency also downgraded the probability of default rating to Caa2-PD from Caa1-PD and the senior secured second-lien note rating to Caa3 from Caa2.

The senior secured bank credit facility rating was affirmed at B1 and the speculative grade liquidity rating at SGL-4 (signifying weak liquidity).

The outlook is negative.

Moody’s said the downgrade reflects its increased liquidity concerns. In light of persistently weak credit metrics and delays in financial reporting, there is increasing risk around the company's ability to refinance upcoming maturities and maintain compliance with financial and reporting covenants.

The company's $210 million revolving credit facility and $150 million accounts receivable securitization facility both mature in April 2017. Alliance One is reliant external sources of liquidity to fund its highly seasonal cash flows. Moody's also expects that Alliance One will be challenged to meet financial covenants under its revolving credit facility, given material tightening of covenant levels over the next year.

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