Moody's may cut CEDC

Moody's Investors Service said it placed on review for possible downgrade Central European Distribution Corp.'s B1 corporate family and probability of default ratings and the B1 rating on the company's senior secured notes due in 2016.

The rating action follows the significant deterioration in the company's operating performances during the fourth quarter of 2010 in addition to weak trading results during the first part of the year, Moody's said.

Moody's noted that the decline in profitability was a result of production disruption in Russia during the peak season and soft demand in Poland as well as structural issues such as erosion of market share and the company's decision to invest more in supporting its brands.

The ratings review will focus on the expected future profitability of the company in light of its new investment strategy, its ability to renegotiate its financial covenants to levels more in line with the expected profitability and the overall liquidity profile of the company, expectations for market conditions in both Russian and Poland and expected key credit metrics, the agency said.

The debt-to -EBITDA ratio was 11.3 times as of December 2010.

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