Moody's reviewing Sara Lee for possible downgrade

by Josh Sosland
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NEW YORK — Moody’s Investors Service, Inc. on Monday said it has placed the long-term debt ratings of Sara Lee Corp. and its subsidiaries under review for possible downgrades.

Moody’s affirmed Sara Lee’s Prime-2 short-term rating. Included in the review is the A3 long-term rating of The Earthgrains Co. and the company’s senior unsecured long-term rating of A3.

Moody’s explained, "The rating review reflects i) recent changes to the company’s five–year transformation plan, including the timing of key asset sales and allocation of proceeds; ii) soft operating results in some core segments; iii) deteriorating performance in the businesses targeted for divestiture; and, iv) weak debt protection measures for the A3 rating category."

Moody’s said that in addition to focusing on the changes to the restructuring plan and prospects for hitting operating goals, the review will evaluate the marketability of the assets to be divested and the "likely strength of the remaining business portfolio following the planned spin off of Sara Lee Branded Apparel."

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