BearingPoint Inc.'s debt rating could be cut to junk by Moody's Investors Service because of executive departures and disappointing profit.
The technology consulting company's rating of Baa3, the lowest investment grade, may be reduced because of slower-than-expected improvement in profit and "very limited cash-flow generation in the near term," Moody's said in an e-mailed statement. The rating covers BearingPoint's $250 million credit facility maturing in May.
BearingPoint's chief executive and chief financial officers resigned recently and third-quarter sales rose less than expected. The McLean-based company also disclosed mistakes in its accounting.
Moody's is evaluating the company's internal controls and financial reporting, the rating firm said. BearingPoint had negative free cash flow of $65 million in the past 12 months, compared with free cash flow of $61 million in the previous year, Moody's said.
Shares of BearingPoint closed at $8.70, up 2 cents.