Moody's cuts Consolidated Container

Moody's Investors Service downgraded Consolidated Container Co. LLC including cutting its $404 million secured credit facility to B3 from B2 and $185 million 10.125% senior subordinated notes due 2009 to Caa2 from Caa1. The outlook is stable. The action ends a review for downgrade.

Moody's said it lowered Consolidated Container because of its revised expectations of the company's run-rate financials throughout fiscal 2003 as well as its currently weak financial condition.

The current financial condition is primarily due to costly operating difficulties sustained throughout fiscal 2002 and a particularly weak fourth quarter resulting from soft volumes and continued high operating expenses.

Moody's added that the stable outlook reflects some improvement in Consolidated Container's liquidity profile, notably reduced term amortization requirements, covenant relief, and extension of maturities under the credit facility, as well as Moody's expectation of improved performance throughout the intermediate term.

Moody's raises Broadwing outlook, rates notes B3, loan B1

Moody's Investors Service assigned a B3 rating to Broadwing Inc.'s $350 million 16% senior subordinated discount notes and a B1 rating to its restated and amended $644 million reducing revolving senior secured credit facility. Moody's also confirmed Broadwing's existing ratings including its $516 million senior secured term loan A due 2006, $308 million senior secured term loan B due 2006, $138 million senior secured term loan C due 2007 and $50 million senior secured notes at B1, $400 million 9% convertible subordinated notes due 2009 at B3 and $155 million 6.75% series B perpetual convertible preferred stock at Caa1, Broadwing Communications Inc.'s $46 million 9% senior subordinated debt due 2008 and $395 million 12.5% junior exchangeable preferred stock due 2009 at Caa3 and Cincinnati Bell Telephone Co.'s $150 million senior unsecured debentures and $140 million guaranteed medium term notes at Ba2. Moody's also raised the outlook to stable from negative.

Moody's said the action follows Broadwing's recent announcement that it has concluded a number of capital structure initiatives including issuance of $350 million senior subordinated debt, with proceeds largely used to repay bank debt, restatement and reduction of its bank credit facility, including a revision of financial covenants and an extension of the maturity date of its revolving credit to 2006 from 2004, "ring-fence" and announced sale of Broadwing Communications to CIII Communications, with a closing expected by the end of the third quarter and agreement by the majority of Broadwing Communications preferred stockholders and subordinated note holders to exchange these instruments for Broadwing Inc. common stock.

Moody's said conclusion of these initiatives has averted a potentially serious liquidity problem that was being exacerbated by the requirements of impending debt amortization and the funding needs of Broadwing Communications.

The outlook change reflects Broadwing's progress in resolving the overhang of its amortization and liquidity problems, as well as the impact of Broadwing's agreement to limit funding to Broadwing Communications prior to its sale later this year, in accordance with the terms of its bank covenants, Moody's added.

Moody's lowers Pliant outlook

Moody's Investors Service lowered its outlook on Pliant Corp. to negative from stable. The senior unsecured issuer rating was cut to Caa1 from B3 and other ratings confirmed including its $495 million secured credit facility consisting of $100 million revolver, $143 million term A loans and $252 million term B loans at B2 and $320 million 13% senior subordinated notes due 2010 at Caa1.

Moody's said the actions reflect weak profitability and margin compression in an increasingly more difficult operating environment. Financial leverage is at a maximum point relative to the ratings category.

Lowering the outlook to negative from stable reflects the continued pressure on Pliant's margins, returns, and cash flow primarily resulting from rapid rises in raw material costs and the related time lag passing through increases to customers, generally soft end-user demand, and soft performance in Latin America, Moody's said. Additionally, some deterioration in the quality of receivables (e.g. increased reserves for losses) along with an increasingly challenging business environment are putting downward pressure on the company's credit statistics.

Financial results are below Moody's expectations, and the change in ratings outlook expresses the absence of tolerance at existing ratings levels for further weakening of the company's credit profile.

At fiscal year end Dec. 31, 2002, financial leverage was high with total debt of approximately $736 million to EBITA of approximately $84 million at 8.7 times (6 times EBITDA of approximately $122 million). Debt is approximately 84% of total revenue of $879 million. EBITDA less capital expenditures barely covered interest expense, Moody's said.

Moody's cuts the senior unsecured issuer rating because of the absence of sufficient value in a distress scenario to fully support senior unsecured obligations and/or those that may be introduced into the capital structure after giving consideration to the effective subordination of approximately $424 million of secured outstandings at fiscal year end Dec. 31, 2002.

Fitch cuts Trenwick

Fitch Ratings downgraded Trenwick America Corp.'s senior debt to D from C.

Fitch said the action Trenwick's announcement that it has defaulted on interest and principal payments on $75 million of senior unsecured debt.

Fitch's said the D rating indicates that it believes that Trenwick America's senior note holders' recovery value is unlikely to exceed 50%.

S&P cuts Venture

Standard & Poor's downgraded Venture Holdings Co. LLC including cutting its $100 million term loan A due 2004, $150 million term loan B due 2005 and $200 million revolver due 2004 to D from CCC.

S&P said the downgrade follows Venture's Chapter 11 filing.

S&P cuts International Wire

Standard & Poor's downgraded International Wire Group Inc. including cutting its senior secured debt to B- from B+ and subordinated debt to CCC- from CCC+. The outlook is negative.

S&P said the action reflects the continued weakness in International Wire's end markets, particularly auto demand, which S&P expects to decline further.

Also, the company's liquidity position has declined substantially year-over-year, to $22.9 million as of Dec. 31, 2002, compared with $38.1 million for the same period in the previous year.

The downgrade also reflected concerns about possible covenant violations under International Wire's bank loan agreement, which could restrict borrowing availability. Financial covenants were recently amended, but continue to remain tight in light of expected end market weakness, S&P noted.

International Wire's weak operating performance has resulted in a deterioration of credit protection measures, S&P said. EBITDA for year ending Dec. 31, 2002, declined 24 percent to $50.1 million from $57.7 million for the same period in 2001, translating into a weak EBITDA coverage of 1.3x. Funds from operations to total debt were a very weak 6.1% for the 12 months ending Dec. 31, 2002. IWG generated negative free cash flow for the full year 2002 of $11.6 million.

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