Moody's Lowers Spansion Ratings, On Watch For Downgrade
4:39 PM EST December 1, 2008
DOW JONES NEWSWIRES
Moody's Investors Service lowered its credit ratings on Spansion Inc. (SPSN) and placed the Flash memory maker's ratings on watch for further downgrade Monday, citing weak holiday sales and the company's expectation of lower fourth-quarter sales.
The downgrade follows the company's announcement last week that it was shutting plants and slowing production in anticipation of slowing sales over the holiday as Spansion said it expected a 20% sequential decline in fourth-quarter sales.
The ratings firm cut Spansion's corporate family and probability of default ratings one notch further into junk territory to Caa2, its senior secured floating rate notes one notch to B3 and its senior unsecured notes rating one notch to Caa3. At the same time, Moody's affirmed the SGL-4 speculative grade liquidity rating.
The flash memory market has been hampered by excess capacity, lower unit demand and continued sharp average selling price erosion over the past 18 to 24 months, according to Moody's.
The ratings were placed on watch for downgrade amid the tight liquidity environment and uncertainty surrounding Spansion's ability to arrange external financing and asset sales to facilitate servicing its debt obligations.
Moody's review will focus on liquidity concerns, a fast decline in flash memory average selling prices and increased competitive pressures from rival products.
In the third quarter, Spansion's loss widened as the company experienced a bigger-than-expected drop in average selling prices.
Shares of Spansion, which have tumbled 95% over the past year, were unchanged in after-hours trading from the Monday close of 20 cents.
-By John Kell, Dow Jones Newswires; 201-938-5285; john.kell@dowjones.com |
