Moody's cuts Radio System

Moody's Investors Service said it downgraded Radio System Corp.'s corporate family rating to B2 from B1 due to higher-than-expected acquisition costs, which has put pressure on financial covenants.

Radio System's probability-of-default rating was also downgraded to B3 from B2. The company's $45 million senior secured revolver due 2011 was lowered to B2 (LGD3, 32%) from B1 (LGD3, 32%) and $150 million senior secured term loan B due 2013 to B2 (LGD3, 32%) from B1 (LGD3, 32%).

The outlook is negative.

"The downgrade principally reflects Moody's concern that the company has incurred higher than expected acquisition related costs subsequent to the ITI merger," Kevin Cassidy, vice president and senior credit officer for Moody's, said in a written statement.

The additional unexpected costs and high inventory balances have put pressure on the company's liquidity position, the agency said.

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