Fitch: Plum Creek outlook stable

Fitch Ratings said it affirmed Plum Creek Timber Co.'s issuer default rating, senior unsecured bonds and bank credit facilities at BBB- and revised the outlook to stable from negative as a consequence of improving business conditions.

The agency said operating earnings are believed to have bottomed in 2009 and at the very least this year should mirror or show some improvement.

The turn in Plum Creek's fortunes was signaled in the fourth quarter when the earnings from manufacturing wood products reached breakeven, Fitch said, and this signal was repeated again in the first quarter when the business turned profitable and the operating income from harvesting and selling logs was better in both year-over-year and sequential comparisons.

The net debt-to-EBITDA ratio was 4.4 times at the end of 2009. Fitch expects that the company will continue to nominally reduce its debt portfolio this year with the proceeds from any large unplanned land sales being directed to both debt and stock repurchases.

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