Moody's downgrades Reddy Ice

Moody's Investors Service said it lowered Reddy Ice Holdings, Inc.'s corporate family and probability-of-default ratings to B3 from B2, and its $12 million senior discount notes due 2012 to Caa2 (LGD6, 96%) from Caa1 (LGD5, 87%).

The agency also lowered Reddy Ice Corp.'s $300 million first-lien senior secured notes due 2015 to B2 (LGD3, 37%) from B1 (LGD3, 36%) and the $139 million second-lien notes due 2015 to Caa2 (LGD5, 84%) from Caa1 (LGD5, 85%). The speculative grade liquidity rating was affirmed at SGL-3.

The outlook remains negative.

Moody's said the downgrade was prompted by Reddy Ice's elevated financial leverage through the first half of 2010 due to weaker-than-expected operating performance and the expectation that leverage will remain elevated.

The B3 corporate family rating considers ongoing operational risks related to weather as well as increasing acquisition activity, the agency said.

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