Moody's ups ACCO to positive

Moody's Investors Service said it revised ACCO Brands Corp.'s outlook to positive because of the expectation that ACCO's operating performance will improve in the near to mid-term and that the company will use its free cash flow to pay down debt thereby improving credit metrics.

Moody's also affirmed ACCO's ratings including its B2 corporate family rating, B2 probability of default rating, B1 (LGD 3, 38%) senior secured notes, Caa1 (LGD 5, 83%) senior subordinated notes and SGL-2 speculative-grade liquidity rating.

ACCO's significant cost rationalization efforts over the last few years, which are expected to continue, combined with select price increases should enable the company to generate around $50 million of free cash flow in 2011 despite losing almost $250 million of revenue since 2008, the agency said.

ACCO's ratings reflect its still relatively high leverage and minimal revenue growth as well as the mature nature of the office supplies industry which has been exacerbated by economic weakness in the United States and Europe, the agency said.

The positive outlook reflects the view that ACCO's operating performance should continue to improve in the near to mid-term, the agency added.

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