MUMBAI (Thomson Financial) - Moody's Investors Service said it downgraded
the corporate family and probability of default ratings of truck transportation
services company Quality Distribution (QDI) to 'Caa1' from 'B3' and raised the
ratings outlook to stable from negative.
The ratings agency said the downgrades reflect the weakened economic
environment that has begun to impact QDI's shipping volumes. In March and April
2008, volumes declined 5 percent, though the company raised prices 3 percent,
which helped partially offset the volume decline, Moody's noted.
Moody's also said the economic weakness will continue impacting QDI's
operating performance at least into early 2009 and will cause free cash flow
generation at about a break-even level.
It added the stable outlook reflects QDI's leading position in the tank
truck market and an adequate liquidity profile. It also reflects cost-cutting
measures, including a 17 percent headcount reduction that QDI has recently
undertaken in response to weaker shipping volumes, the ratings agency said.
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