Moody's downgrades Ardagh Glass

Moody's Investors Service said it downgraded Ardagh Glass Group plc's corporate family rating to B2 from Ba3, its €125 million senior unsecured notes due 2015 to Caa2 from B3 and Ardagh Glass Finance BV's €175 million senior subordinated notes due 2013 to Caa1 from B2. The outlook is negative.

The downgrade reflects Moody's concerns regarding the deterioration in Ardagh's credit metrics and free cash flow generation due to the intensifying competitive environment in the U.K. glass container industry, which is characterized by overcapacity and consequent pricing and margin pressure, and the volatility of raw material prices and energy costs which have negatively impacted margins.

The agency said the ratings are further constrained by the company's adjusted debt to adjusted EBITDAR ratio of 6.7x as of Dec. 31 and the expected limited scope for deleveraging in the near-to-medium term, the execution risk associated with the need to improve the margins of the recently acquired Redfearn Glass Ltd. operations and the ongoing challenges in the competitive German market.

The ratings are supported by Ardagh's experienced management team and well-invested manufacturing facilities at its U.K. plants, Moody's said.

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