Crown Holdings looking for net leverage ratio of 2.0 times

By Jennifer Lanning Drey

Portland, Ore., Dec. 2 - Crown Holdings, Inc. plans to continue to apply free cash flow toward deleveraging until the company achieves its target net leverage ratio of approximately 2.0 times, at which point it is likely to allocate that cash toward more shareholder-friendly avenues, Timothy J. Donahue, chief financial officer of Crown, said Wednesday.

Speaking during the Bank of America Merrill Lynch Credit Conference in New York, Donahue said he expects Crown to end 2009 with net leverage of about 2.4 times and reach the net leverage ratio target of 2.0 times by the end of 2010.

"I think we're very close to a target leverage number that we believe from a standpoint of efficiency of the capital structure, that we get a little less efficient if we go too much lower," Donahue said.

Crown's cash flow priorities continue to be to invest in the business in areas such as ongoing cost-reduction projects and Greenfield or growth opportunities with a relatively quick payback period, he said.

Leftover free cash flow after capital expenditures is currently being dedicated entirely to debt reduction, but Crown will consider alternative uses for free cash flow such as share repurchases or a dividend once it meets its leverage target.

However, Donahue later noted, "Even when we get to our target of 2.0 times, that doesn't mean we're going to dedicate 100% of the free cash flow to more shareholder friendly avenues, but clearly a larger majority would be dedicated to that."

Crown Holdings is based in Philadelphia and makes packaging products through its subsidiaries.

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