Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
27 Apr 2004
MOODY'S RATES SR. SEC'D NOTES OF WISE METALS GROUP B2; SGL-3 LIQUIDITY RATING; STABLE OUTLOOK
Approximately $150 Million of Debt Securities Affected
New York, April 27, 2004 -- Moody's Investors Service assigned first-time ratings to
Wise Metals Group LLC (Wise), the third largest producer of aluminum
beverage can stock in North America. The following ratings were
B2 for the proposed $150 million senior secured notes, due
2012, jointly issued by Wise and Wise Alloys Finance Corporation,
B2 senior implied rating,
Caa1 senior unsecured issuer rating, and
SGL-3 speculative grade liquidity rating.
The rating outlook is stable. Proceeds from the proposed note offering
and approximately $23 million of bank revolver borrowings will
be used to repay all existing debt and redeem small amounts of preferred
and common shares from inactive members.
Moody's ratings reflect Wise's dependence on a single asset,
dependence on sales chiefly to two customers, and lack of pricing
power in a mature market dominated by two much larger, financially
stronger, and fully integrated competitors, Alcan and Alcoa.
Wise may not have the financial resources required to adapt to significant
technological or aluminum can design changes. Market share concentration
and intense competition among packaging companies and their customers,
the beverage companies, as well as competition from other packaging
materials such as plastics and glass, have limited the operating
margins earned by producers of can stock and this is expected to continue.
The ratings are supported by the technological capabilities of Wise's
Listerhill facility, its fairly stable conversion costs, and
the modest but encouraging progress it has made in expanding its can stock
The stable outlook assumes that Wise will be able to maintain stable conversion
margins, i.e., will be relatively unaffected
by changes in aluminum metal prices, and that its conversion costs
can be flexed in response to changing demand. Factors that could
lead to a negative outlook include loss of market share or a major customer,
material margin compression, inability to source adequate supplies
of scrap aluminum at historical discounts (around 11 cents per pound)
to primary aluminum, reduced liquidity, or increased debt.
Primary factors that could change the outlook to positive include consistent
attainment of management's financial forecast, further cost
reductions, inroads into new, higher margin markets,
or a significant reduction in leverage.
Aluminum used in beverage cans in the U.S. has not changed
since 1996, when can thickness was reduced. Wise has about
15% of the domestic market, whereas Alcan and Alcoa each
have about 37% market share. The demands of the packaging
and beverage companies in terms of product improvements and quality are
high. This has contributed to the exit of many smaller can stock
producers over the last decade. Wise's Listerhill facility
is a modern and efficient plant, which is technologically capable
of rolling lighter gauge can stock. However, future changes
to aluminum beverage cans or the manufacturing process could pose a serious
risk to Wise given its limited financial resources.
Wise's largest customers are Ball Corporation (rated Ba2) and Crown
Cork & Seal (rated B2), which represented 66% and 25%
of Wise's revenues in 2003. Can stock sales are governed
by supply agreements that specify annual shipment volumes, but actual
shipments can vary with customers' output at the plants that Wise
supplies. Twice a year, on a six-month trailing average
basis, can stock selling prices are adjusted for fluctuating LME
aluminum prices. Wise completed the qualification process with
Rexam at two of its locations in 2003, shipped a small amount of
can stock to them in 1Q04, and hopes to grow this relationship.
Wise recently began trial shipments with another North American can manufacturer.
Wise also expects to increase sales of food container, trailer roofing,
fin stock, and StarBright products.
Wise's financial performance is expected to continue to be constrained
by aluminum beverage can market dynamics, notably the oligopolistic
nature of the can manufacturing and beverage industries, and by
its cost structure. Unlike integrated producers of primary aluminum,
which have their own sources of alumina and aluminum and occasionally
benefit from high aluminum prices, Wise's profitability generally
depends on how well it controls its conversion revenue, the difference
between its product prices and the cost of the aluminum it consumes.
This has been averaging about $220 million per year and is not
likely to change appreciably under established competitive conditions.
Labor, energy, supplies, and maintenance parts are Wise's
largest conversion costs.
In 2003, decreased can stock shipments, due primarily to the
unseasonably cool and wet summer, lowered Wise's net sales
to the lowest level in five years. Lower shipments and higher natural
gas prices caused a decline in its operating margin in 2003, to
2.0% of sales, compared to 3.6% in 2002
and a five-year high of 4.4% in 2001. For
the twelve months ended March 31, 2004, Wise had EBITDA of
$39 million, including a $15.2 million LIFO
inventory adjustment. On a pro forma basis, Wise's
EBITDA to interest will be 2.5 times and the ratio of EBITDA-less-capex
to interest will be 1.4 times. Moody's expects Wise's
financial results to improve in 2004 over 2003, but its narrow margins
may lead to cash shortfalls from time to time.
Aluminum represents Wise's largest cost, roughly two-thirds
of cost of sales, but its can stock selling prices adjust for metal
costs on a lagged basis. However, unlike Alcan and Alcoa,
Wise must purchase primary and scrap aluminum in the open market.
In order to reduce its exposure to short-term (six-month)
increases in aluminum prices, Wise fixes the cost of aluminum through
futures contracts and options. Wise relies on scrap aluminum for
a large portion of its raw material requirements, 71% in
2003. Its margins improve when the discount between scrap and primary
aluminum increases. The scrap discount is currently very high,
around 19 cents per pound. However, the company anticipates
that the discount will return to a range of 7 to 15 cents per pound once
primary aluminum prices normalize. Scrap purchases from an affiliated
company, Wise Recycling, provided 10% of its scrap
The SGL-3 speculative grade liquidity rating reflects Moody's
expectation that Wise will have modest or even negative free cash flow
over the next 12 months, but that its senior secured revolving credit
facility will provide it with adequate liquidity. While Wise's
net income is expected to increase in 2004, Moody's anticipates
that higher shipments and higher selling prices will require greater investment
in working capital, which will limit cash generation. Revolver
availability at closing is expected to be $50 million, after
adjusting for borrowings and letters of credit. Moody's noted
that the company's aluminum and natural gas hedging activities often
require the posting of initial margin with counterparties, and may
require the posting of additional collateral or letters of credit when
mark-to-market exposures exceed specified ranges.
Wise is expected to remain in compliance with all its debt covenants.
Moody's rated Wise's senior secured notes the same as Wise's
senior implied rating since the notes represent a high percentage of the
company's total debt. Support for the B2 note rating is also
provided by a first priority lien on Wise's fixed assets and a second
priority lien, junior to the lien securing the credit facility,
on inventory and accounts receivable. The credit facility (unrated)
is secured by a first lien on inventory and accounts receivable and a
second lien on fixed assets. Wise's pro forma debt will be
around $176 million, or 4.5 times LTM EBITDA.
Wise Alloys LLC produces aluminum can stock and packaging products from
a casting and rolling facility in Muscle Shoals, Alabama.
The company has its headquarters in Baltimore, Maryland.
Corporate Finance Group
Moody's Investors Service
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Corporate Finance Group
Senior Vice President
Corporate Finance Group
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.