Moody's downgrades Appvion

Moody's Investors Service said it downgraded Appvion Inc.'s corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and second-lien senior secured notes to B3 (LGD4) from B2 (LGD5). The senior secured revolving credit facility and first-lien term loan were affirmed at Ba2 (LGD2), and the speculative grade liquidity rating remains SGL-2. The outlook is stable.

The agency said the downgrade reflects the smaller, less-diversified company that Appvion becomes following the sale of its high-margin micro-encapsulation business for $208 million. Most of the proceeds will be used to pay down debt ($165 million), but it will still leave the company with high pro forma leverage (adjusted debt to EBITDA) of about 9 times for the last 12 months ended in March given the current cyclically low thermal paper prices, Moody’s said.

The agency said Appvion's B2 corporate family rating reflects high adjusted leverage, the secular decline in the demand for the company's carbonless paper business and the cash repurchase obligations related to its employee stock ownership plan.

The ratings also consider the company's leading global market positions in thermal and carbonless papers and expectations that the company's exposure to potential contingencies associated with environmental issues have been capped, Moody’s said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.