Moody’s downgrades United Distribution

Moody's Investors Service said it downgraded United Distribution Group, Inc.'s corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD.

The company’s senior secured first-lien credit facilities also were downgraded to B3 from B2 and senior secured second-lien term loan to Caa3 from Caa2.

The downgrades reflect the recent substantial deterioration in United's operating results and credit metrics, Moody’s said, and an expectation they will remain weak over the next 12- to 18-months.

The outlook is stable.

The ratings reflect the company’s small size, high leverage, limited asset coverage, acquisitive history and significant exposure to the oil and gas and coal mining sectors, Moody’s said.

These factors are somewhat balanced by the company's market position, effective cost management and the counter-cyclical working capital needs and limited capital expenditure requirements of the distribution business model, the agency said.

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