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Moody's cut DVI's senior debt rating from B2 to B3, the sixth lowest on its rating scale.

At the same time, Fitch Ratings (News) said it may lower DVI's B-plus senior debt rating on similar concerns.

Moody's and Fitch's moves came less than a week after Standard & Poor's Ratings Services put DVI's credit rating on watch for possible downgrade.

The rating agencies raised concerns over DVI's ability to refinance $155 million of senior notes due February 2004 after the company came off a poor fiscal year 2002.

"A series of events over the last week has further increased Fitch's concern regarding the successful refinancing of the unsecured debt," Fitch said in a statement.

On June 4, DVI said its long-time auditor Deloitte and Touche had resigned, without offering details, and the company, based in Jamison, Pennsylvania, was looking for a new auditor.

Five days later, DVI said it had a disagreement with Deloitte over the accounting treatment on a series of transactions between DVI and a radiology facility in Corpus Christi, Texas.

Also, DVI revealed that Deloitte had told DVI management back in 2002 that it found "a material weakness" in DVI's monitoring of bad loans, an issue that DVI said it had been "appropriately resolved."

DVI filed its quarterly results on May 20 with the Securities and Exchange Commission (News - Websites) although Deloitte did not fully complete its audit because it needed more information on DVI's deal with the Texas radiology facility.

"Since Deloitte performed the review that we requested, we do not accept their characterization," DVI said in its May 20th SEC filing.

Deloitte had asked on May 29 DVI's audit committee for more documents in its review of those deals. The additional information would be used in Deloitte's decision to recommend any changes in the accounting treatment, DVI said.

If the accounting treatment on those deals were changed, DVI's assets and shareholder equity would be cut by $2.6 million and $1.8 million, respectively, according to DVI's May 20th SEC filing.

Moreover, its net income would be reduced by about $121,000 and $360,000, for the three and nine months ended March 31.

DVI said on Monday that its audit committee began the information-gathering process on the deals with the Texas radiology facility, and at Deloitte recommendation, retained independent counsel to assist it in that process. That process has continued after Deloitte's resignation.

"The naming of a new accounting firm and the timely issuance of financial statements containing an unqualified audit opinion by this new firm would be viewed positively," Moody's said in a statement.