Moody's cuts Polymer Group view to negative

Moody's Investors Service said it changed Polymer Group, Inc.'s outlook to negative from stable. The negative outlook applies to the company's B1 corporate family rating, B2 probability-of-default rating, B1 $45 million senior secured revolver due 2010 (LGD3, 33%) and B1 $410 million senior secured term loan B due 2012 (LGD 3, 33%).

The change in outlook reflects Moody's concern regarding negative cash flow generation, potentially narrow cushions under financial covenants, weakness in demand in certain segments and the effect of lags in passing on increases to converters in a rising raw material price environment, which resulted in substantive reductions in gross margins in 2006. Moody's said it is also concerned that such challenges will be harder to manage at a time when top management is in transition.

Notwithstanding high financial leverage, weak interest coverage and weaker-than-expected cash flow generation in 2006 for the rating category, the B1 ratings remain supported by the company's competitive strengths, multi-year contracts, long-standing customer relationships and Moody's assessment of overall enterprise value in relation to debt levels.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.