Shares of copier maker Xerox fell over 12 per cent today after Moody's Investors Service cut its "junk" ratings on the company.
The shares fell to a session low of $7.90 just after the opening bell on the New York Stock Exchange, before edging back to $8.08, off 99 cents, or 10.9 per cent. The stock was the second most active on THE New York Stock Exchange.
Moody's late Wednesday cut Xerox's senior unsecured debt three notches to "B1," its fourth highest junk grade out of 11, from "Ba1."
Moody's had warned in January that it might make the cuts.
Management has been scrambling for more than a year to turn around the maker of photocopiers and printing machines in an effort to return to profitability. The company has sold billions of dollars worth of assets and trimmed staff but has been dogged by lingering questions about its accounting practices and worries about its ability to accelerate revenue.
Moody's' cuts should increase Xerox's borrowing costs at a time when the company faces growing competition and a slump in corporate spending.
Xerox must renegotiate $7 billion of loans by October, but expects to have a deal by June with the 57 banks involved in its revolving credit agreement.
Xerox chief executive Ms Anne Mulcahy responded to the downgrade by calling the move "inconsistent with the company's progress and momentum."
"We have significantly improved our operations and strengthened our liquidity," she added.