Moody's downgrades Pliant

Moody's Investors Service said it downgraded ratings on Pliant Corp. due to the significant amount of stress reflected in the overall credit profile, as well as weak profitability and cash generation relative to expectations.

More specifically, Moody's lowered Pliant's $7 million 11 1/8% senior secured first-lien notes due June 15, 2009 (PIK until 2007) to Caa1 from B3 and assigned a Caa1 rating to the $255 million 11 5/8% senior secured first-lien notes due June 15, 2009 (PIK until 2009). Moody's also cut the $250 million senior secured second-lien notes due Sept. 1, 2009 to Caa3 from B3, the $314 million 13% senior subordinated notes due June 1, 2010 to Ca from Caa2 and the corporate family rating to Caa1 from B2.

The outlook remains negative.

Moody's said the rating actions reflect that rising raw material and energy costs, declines in sales volume, and inefficiencies associated with lower production levels have resulted in financial leverage (total debt to EBITDA) rising to over 10x for the 12 months ended June 30, 2005.

The ratings benefit from expectation that Pliant's diverse product line and customer base will continue to support stable revenue generation, the agency said.

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