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03 May 2010
Approximately $4.5 billion in rated debt securities affected
New York, May 03, 2010 -- Moody's Investors Service ("Moody's") upgraded the Corporate
Family Rating of Owens Illinois, Inc. ("OI")
to Ba2 from Ba3. The rating outlook remains stable. Moody's
also assigned a Ba3 rating to the new $500 million exchangeable
senior unsecured notes due 2015. The notes are issued by Owens-Brockway
Glass Container, Inc. ("OBGC"), an indirect wholly
owned subsidiary of Owens-Illinois, Inc., and
the proceeds will be used for general corporate purposes including acquisitions
and debt reduction. Additional instrument ratings are detailed
Moody's took the following rating actions for Owens Illinois,
- Upgraded Corporate Family Rating to Ba2 from Ba3
- Upgraded Probability of Default Rating to Ba2 from Ba3
- Upgraded $500 million senior unsecured notes and debentures
($288 million outstanding) due in 2010 and 2018 to B1 (LGD 6,
94%) from B2 (LGD 6, 93%)
- Affirmed Speculative Grade Liquidity Rating SGL-2
Moody's took the following rating actions for Owens-Brockway
Glass Container Inc.:
- Upgraded $900 million senior secured first lien revolving
credit facility maturing June 15, 2012 to Baa2 (LGD 1, 9%)
from Baa3 (LGD 2, 10%)
- Upgraded $200 million senior secured first lien term loan
B due June 12, 2013 to Baa2 (LGD 1, 9%) from Baa3 (LGD
- Affirmed EUR 225 million senior unsecured notes due December
1, 2014 at Ba3 ( LGD 5, 73%, from LGD 4,
- Affirmed $1450 million senior unsecured notes due 2013-2016
to Ba3 (LGD 5, 73% from LGD 4, 59%)
- Assigned $500 million exchangeable senior unsecured notes
due 2015, Ba3 (LGD 5, 73%)
Moody's took the following rating actions for OI European Group
- Upgraded EUR 200 million senior secured first lien term loan
D due June 12, 2013 to Baa2 (LGD 1, 9%) from Baa3 (LGD
- Upgraded EUR 300 million senior unsecured notes due March 31,
2017 to Ba2 (LGD 3, 39%) from Ba3 (LGD 4, 59%)
Moody's took the following rating actions for ACI Operations Pty.
Ltd. and O-I Canada Corp:
- Upgraded AUD 300 million senior secured first lien term loan
A due June 12, 2013 to Baa2 (LGD 1, 9%) from Baa3 (LGD
- Upgraded CAD 138 million senior secured first lien term loan
C due June 12, 2013 to Baa2 (LGD 1, 9%) from Baa3 (LGD
The ratings outlook remains stable.
The upgrade of the Corporate Family Rating to Ba2 reflects credit metrics
that are in line with the rating category with the potential for further
improvement over the rating horizon and strong liquidity. The rating
also reflects OI's leading position in the industry, wide geographic
footprint and focus on profitability rather than volume. Despite
the proposed debt issuance, OI's pro-forma credit metrics
remain largely in line with the rating category even before consideration
of a likely increase in operating income from projected acquisitions,
cost cutting/productivity and the improvement in contract structures in
North America (which include better pricing and cost pass throughs).
The company will also benefit from any rebound in volumes (cyclical or
otherwise). Liquidity is strong as the company has good free cash
flow, significant availability under its credit facility and substantial
cushion under its covenants.
The ratings are constrained by concentration of sales, potential
acquisition risk and the asbestos liabilities. The ratings are
also constrained by the mature state of the industry, cyclical nature
of glass packaging and low growth in developed markets.
The Ba3 rating for the existing and new senior unsecured notes at OBGC
reflects their contractual subordination to the debt at O-I European
Group B.V. (The Netherlands). As outlined,
the ratings for the new senior unsecured debt due 2015 are subject to
receipt and review of final documentation. The ratings also reflect
Moody's belief that any further issuance at OI will likely be at O-I
European Group B.V. (The Netherlands) given the current
mismatch between currency cash flow and interest expense and position
of the net operating losses.
The rating on the new and outstanding senior unsecured notes at OBGC reflects
their unsecured status, contractual subordination to the first lien
debt and the debt at O-I European Group B.V. and
guarantees by Owens-Illinois Group, Inc (U.S.)
and certain subsidiaries. The ratings also reflect further anticipated
issuance at O-I European Group B.V. (The Netherlands).
As outlined in the press release dated May 7, 2009, all of
the senior unsecured notes at OBGC could ultimately be notched lower if
the long term debt at OBGC increases or if foreign debt increases.
The notes issued by OI European Group BV (Netherlands) are structurally
closer to the majority of the company's sales and assets as OI generates
approximately 76% of sales and has approximately 77% its
assets overseas. The ratings for the new notes are subject to receipt
and review of final documentation.
Moody's last rating action on Owens Illinois occurred on May 7,
2009 when Moody's rated new senior unsecured notes and affirmed
Ba3 CFR and stable outlook. The principal methodology used in rating
O-I was Moody's Global Packaging Manufacturers: Metals,
Glass and Plastic Containers, published in June 2009 and available
on www.moodys.com in the Rating Methodologies sub-directory
under the Research & ratings tab. Other methodologies and factors
that may have been considered in the process of rating this issuer can
also be found in the Rating Methodologies sub-directory on Moody's
Headquartered in Perrysburg, Ohio, Owens-Illinois,
Inc. is one the leading global manufacturers of glass containers,
operating 78 plants in 22 countries. In 2009, O-I
had revenues of approximately $7.1 billion.
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Moody's Upgrades Owens Illinois CFR to Ba2 with stable outlook, rates new notes
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
No Related Data.
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