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Moody's lowers United Subcontractors
Moody's Investors Service said it lowered United Subcontractors, Inc.'s corporate family rating to Caa2 from Caa1, probability-of-default rating to Caa1 from B3, $295 million first-lien term loan due 2012 and $17.44 million first-lien revolving credit facility due 2011 to Caa2 (LGD4, 59%) from Caa1 (LGD4, 60%) and $65 million second-lien term loan due 2013 to Caa3 (LGD6, 96%) from Caa2 (LGD6, 96%).
This concludes the review that began on Nov. 14, 2007, and the outlook is negative.
The agency said the downgrade was prompted by concerns related to the negative effects of the homebuilding contraction on the company's liquidity position, its projected cash flow generation and concerns over its ability to weather the protracted housing downturn. While the company has aggressively reduced its cost structure, Moody's said the severity and depth of the homebuilding contraction has outpaced the speed at which the company has been able to reduce costs.
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