Moody's lowers Central Garden

Moody's Investors Service said it lowered Central Garden & Pet Co.'s corporate family and probability-of-default ratings to B2 from B1.

Moody's also downgraded the issuer's $150 million senior subordinated notes due 2013 to Caa1 (LGD5, 88%) from B3 (LGD5, 88%), $350 million senior secured revolving credit facility due 2011 to B1 (LGD3, 39%) from Ba3 (LGD3, 39%) and $300 million senior secured term loan due 2012 to B1 (LGD3, 39%) from Ba3 (LGD3, 39%).

The downgrade reflects the company's weak operating performance for the quarter and fiscal year ended Sept. 29 that resulted in elevated borrowing levels and deteriorated credit metrics, the agency said. The company's debt-to-EBITDA ratio grew to 4.8 times for fiscal 2007 from 3.8 times the same period the past year.

The downgrade also considers significant ongoing business challenges that will pressure fiscal 2008 operating performance, including continued volatility in grain prices, elevated garden inventory levels and soft demand in the aquatics category, according to Moody's.

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