Nine companies on Moody

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The nine — , , , , , , , and are among 283 American corporation s carrying debtthat Moody’s considerx very highly speculative or more Moody’s classifies those firms as with a negative outloolk or lower on its ratings scale. The ratinbg agency formalized its bottom rung groul for the first timein 2009, but based on 2008 ratings, 157 companiesd would have met the same criteria. Of that 2008 one sole company (Houston-based ) receivedc a rating upgrade; 23 others slipped off the bottom rung and into defaulgt or had their ratings withdrawhnby Moody’s.
All of the Dallas-basedf companies and New York-based Six which operates the Six Flagsz Over Texas amusement park and Six Flagws Hurricane Harborwater park, both in would have been on this list if it had been compileds last year. In formalizing the information intoa report, the ratingxs agency is arguing that these firms face an increasing risk of defaultinbg on their debt. And in the current financial they have limited options for improvinhgtheir situation. “The right thingt to try to do is saidBrian Bruce, a finance professor at ’sa Cox School of Business.
Banks, landlords and others dependent on a compan for a revenue stream wouldx rather preserve a portion of that revenue for the long term than risk losing it Raising money from equityinvestors — the flip side to cuttingf expenses or renegotiating financing — is less appealing: “Eveb if people wanted to buy your would you want to (sell a stakw of the company) at such reduced Bruce said. If equity markets remain moribund and if debtholdere aren’t willing to renegotiate, that leavesa default and bankruptcy. The lowest rated of the Dallas the yellow pages publisher and onlind information listerIdearc Inc.
, followed up its placemengt on the list with the admissiojn that the company may file for Chapter 11 bankruptc y reorganization to combat the challenges it faces. That statement was met with resistancee bythe company’s largest shareholder. Jack Corwin, a Calif., investor, has argued that the company has many optionsbeforw bankruptcy. Based at Dallas/Fort Worth International Airport, Idearc has facedr the twin levers of dwindling revenue from its core businessw of print publishing and paying offsome $9.3 billion in the vast majority of which it was saddlede with when it was spun off from in November 2006.
Companty officials referred questions aboutthe company’s placemenft on the “Bottom Rung” to its March 12 earningss release for the fourth quarter of 2008. In that Idearc said restructuring its capitalization and debtobligations “ti a more appropriate level will provid us with the opportunity to prosperr and grow in the years ahead.” Similarly, Six Flags is struggling to cope with some $2.3 billiojn in total debt. The major according to Jeff Speed, the New York-based company’s executive vice president and chiefinancial officer, is two chunks of debt totaling abouyt $400 million that come due in Augusf and in February 2010.
“We’rew in the midst of negotiations with creditorsd to achieve a restructuring of our obligations ona out-of-court basis,” he says. This Six Flags’ CEO Mark Shapiro said duringt a conference call that an unnamed debt holder has refusee to negotiate withthe company. Speed saying, “We have widespread support from creditors, one beinvg the roadblock, but we are continuinfg to push fora resolution.” Speed says that he doesn’tf have a problem with the companyg being on the Moody’s list, but adds that unliker many firms in the “Bottom Rung,” Six underlying business is doing well.