Moody's lowers Atlantis Plastics

Moody's Investors Service said it downgraded Atlantis Plastics, Inc.'s corporate family and probability-of-default ratings to Caa1 from B2, $25 million revolving credit facility due 2011 and $120 million senior term loan due 2011 to B3 (LGD3, 41%) from B1 (LGD3, 35%) and $75 million junior term loan due 2012 to Caa2 (LGD5, 80%) from Caa1 (LGD5, 84%). The agency also assigned an SGL-4 speculative grade liquidity assessment to the company.

The outlook remains negative due to the continued poor liquidity.

The agency said the downgrade reflects the sustained deterioration in the company's credit statistics and poor liquidity; the company's EBIT coverage of interest expense has declined to roughly 0.6x and the adjusted debt-to-EBITDA ratio has ballooned to roughly 7.3x for the 12 months ended March 31.

Atlantis' reliance on the recreational vehicle and housing markets has negatively impacted the company as demand has softened in those segments and pressured volumes and margins, Moody's said, and the company was forced to amend its credit facility covenants in 2006 to avoid defaults and cushion under the reset covenants is still very limited.

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