Moody's downgrades Tosca

Moody's Investors Service said it downgraded Tosca Services, LLC's corporate family rating to B3 from B2, the probability of default rating to B3-PD from B2-PD, and the rating on its first-lien term loan to B3 from B2. The outlook has been changed to negative from stable.

“The downgrade and negative outlook reflect a weakening of credit metrics and liquidity from a challenging macroeconomic environment, the loss of a U.S. produce retailer, and unfavorable foreign exchange impact from the deterioration of the euro,” Moody’s said in a press release.

About half of Tosca's EBITDA is generated in Europe and it lacks in place currency hedges to soften the negative effect on U.S. dollar reported financial results. Free cash flow is negative due to capital spending on pallets, containers, and equipment needed to serve new business wins, the agency said.

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