Moody's lifts Ply Gem

Moody's Investors Service said it upgraded Ply Gem Industries, Inc.'s corporate family and probability-of -default ratings to Caa1 from Caa2 and affirmed the senior secured notes due 2013 at Caa1 (LGD4, 51% from LGD3, 36%).

The agency assigned a Caa3 rating (LGD6, 93%) to the proposed senior subordinated notes due 2014 and upgraded the 9% senior subordinated notes due 2012 to Caa3 (LGD6, 93%) from Ca (LGD5, 89%).

The outlook was changed to stable from negative.

Moody's said the upgrade of the corporate family rating results from the recent announcement that CI Capital Partners LLC, Ply Gem's indirect principal shareholder, through a series of transactions is transferring $257.3 million of 9% senior subordinated notes due 2012 that it owns to Ply Gem for no consideration as a capital contribution.

Ply Gem is also refinancing the balance of the 9% senior subordinated notes due 2012 with new senior subordinated notes due 2014.

Despite the reduction in debt Ply Gem remains highly leveraged, the agency said, with pro form debt leverage reduced to about 9 times versus 11.2 times.

Ply Gem's corporate family rating is constrained by the company's weak end markets, uncertainty surrounding near-term pricing power, anticipated weak free cash flow generation and potential limited availability under the revolving credit facility, the agency noted.

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