Moody’s rates Euramax notes Caa2

Moody's Investors Service said it affirmed Euramax International, Inc.'s Caa2 corporate family rating following the company's announcement that it will issue $385 million five-year senior secured notes due 2020.

The agency also assigned a Caa2 rating on the proposed notes.

The outlook remains stable.

Proceeds will be used to refinance Euramax's existing 9˝% senior secured notes due April 2016.

Moody's acknowledges positive momentum in Euramax's key credit metrics and expects continued recovery in the next 12-18 months.

Moody's said it views the proposed $385 million senior secured notes as a credit positive for Euramax. The existing senior secured notes come due April 2016 and – absent the proposed transaction – Euramax could be facing a potential liquidity crunch.

Euramax is starting to show signs of operational recovery, the agency said. However, the Caa2 corporate family rating the company's constrained by its high debt coupled with weak interest coverage.

Additionally, Euramax's negative cash flow generation remains a concern for Moody's.

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