Moody's cuts Chesapeake PDR to D

Moody's Investors Service said it downgraded the probability-of-default rating of Chesapeake Corp. to D from Ca/LD and affirmed its corporate family rating at Ca, its £67.1 million 10 3/8% senior subordinated notes due 2011 and €100 million 7% senior subordinated eurobonds due 2014 at C (LGD5, 86%) and its $18.75 million 6 3/8% senior unsecured revenue bonds due 2019 and $31.25 million 6¼% senior unsecured revenue bonds due 2019 at Ca (LGD4, 69%).

The downgrade follows the announcement that Chesapeake and its U.S. operating subsidiaries filed voluntary Chapter 11 petitions in an effort to consummate the sale of all of its operating businesses as a going concern to a group of investors led by Irving Place Capital Management, LP and Oaktree Capital Management, LP.

The agency said the purchase price is reportedly $485 million, less pension and severance obligations and borrowings under the senior secured credit facility, and that the company is seeking a $37 million debtor-in-possession facility.

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