Moody's rates Smurfit-Stone loan B2

Moody's Investors Service said it assigned a provisional B2 rating (LGD3, 46%) to Smurfit-Stone Container Enterprises, Inc.'s proposed credit facility, consisting of a $1.2 billion six-year term loan and provisional B2 corporate family and probability-of-default ratings.

The outlook is stable.

Proceeds will be used to repay pre-petition bank debt. The company is expected to emerge from bankruptcy in April.

The B2 rating reflects the company's weak cash flow generation, high adjusted leverage, declining demand for paper-packaging and significant pension obligation, the agency noted.

Ratings are supported by the successful restructuring efforts during bankruptcy such as debt reduction and operational footprint and cost structure improvements, the agency said.

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