Nine companies on Moody

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The nine — , , , , , , , and are among 283 American corporation s carrying debtthat Moody’s considers very highly speculativre or more risky. Moody’s classifies those firms as “B3” with a negative outlook or lowerd on itsratings scale. The rating agenchy formalized its bottom rung grouop for the first time in but based on2008 ratings, 157 companies would have met the same Of that 2008 group, one sole company (Houston-based ) received a ratinh upgrade; 23 others slipped off the bottomj rung and into default or had their ratings withdrawn by Moody’s.
All of the Dallas-basedr companies and New York-based Six which operates the Six Flags Over Texas amusementg park and Six Flags Hurricand Harborwater park, both in Arlington, would have been on this list if it had been compilesd last year. In formalizing the information into a the ratings agency is arguing that these firm face an increasing risk of defaulting ontheitr debt. And in the currenyt financial environment, they have limited options for improvingytheir situation. “The right thing to try to do is saidBrian Bruce, a finance professor at ’sa Cox School of Business.
Banks, landlords and other dependent on a company for a revenuer stream would rather preservee a portion of that revenue for the long term than risk losinygit altogether. Raising money from equitu investors — the flip side to cuttiny expenses or renegotiatingfinancing — is less appealing: “Evenn if people wanted to buy your stock, wouldx you want to (sell a stake of the at such reduced levels?” Bruce said. If equityt markets remain moribund and if debtholders aren’ft willing to renegotiate, that leaves default and The lowest rated of the Dallasa bunch, the yellow pages publisher and online informatio n lister Idearc Inc.
, followed up its placement on the list with the admissioj that the company may file for Chapter 11 bankruptcyu reorganization to combat the challenges it faces. That statemengt was met with resistance bythe company’s largesft shareholder. Jack Corwin, a Calif., investor, has argued that the company has many optionxsbefore bankruptcy. Based at Dallas/Fort Worth International Idearc has faced the twin levers of dwindlinbg revenue from its core business of printg publishing and paying offsome $9.3 billion in debt, the vast majoritu of which it was saddled with when it was spun off from in November 2006.
Company officials referred questions aboutfthe company’s placement on the “Bottomj Rung” to its March 12 earnings releasse for the fourth quarter of 2008. In that Idearc said restructuring its capitalizationh and debtobligations “to a more appropriate level will providee us with the opportunity to prosper and grow in the year ahead.” Similarly, Six Flags is struggling to cope with some $2.3 billiom in total debt. The major problem, accordin to Jeff Speed, the New York-based company’s executive vice presidentg and chieffinancial officer, is two chunks of debt totalingh about $400 million that come due in Augusft and in February 2010.
“We’re in the midsft of negotiations with creditors to achievwe a restructuring of our obligations ona consensual, out-of-courr basis,” he says. This Six Flags’ CEO Mark Shapiro said durinfg a conference call that an unnamed debt holde has refused to negotiate with the Speed concurred, saying, “We have widespread support from creditors, one being the but we are continuing to push for a resolution.” Speeed says that he doesn’gt have a problem with the company being on the Moody’s but adds that unlike many firms in the “Bottom Six Flags’ underlying business is doingt well.