Moody's downgrades Consolidated Container, rates loan Caa1

Moody's Investors Service said it downgraded Consolidated Container Co. LLC's corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD, $370 million senior secured first-lien term loan due 2019 to B2 (LGD3, 37%) from B1 (LGD3, 38%) and $275 million senior notes due 2020 to Caa2 (LGD5, 85%) from Caa1 (LGD5, 83%) and assigned a Caa1 (LGD4, 65%) rating to its $80 million senior secured second-lien term loan due 2020, for which Consolidated Container Holdings LLC is co-borrower. The outlook is stable.

The proceeds of the term loan will be used, along with cash, to fund the acquisition of Envision Plastics and pay the anticipated earnout.

The agency said the downgrade reflects the company's failure to achieve projected operating results and improve credit metrics to a level consistent with the B2 rating category.

The B3 corporate family rating reflects the company's concentration of sales, significant percentage of commoditized products and percentage of business that is not under contract, Moody's said.

The rating is supported by the company's ongoing cost reduction initiatives, anticipated ramp-up of higher-margin new business and adequate liquidity, the agency added.

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