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Rating Action:

Moody's confirms Consolidated Container's B2 CFR, ends review, rates new debt

20 Jun 2012

Approximately $620 million of rated debt securities affected

New York, June 20, 2012 -- Moody's Investors Service ("Moody's") confirmed the B2 Corporate Family Rating, other instrument ratings and stable outlook of Consolidated Container Company LLC ("CCC") and concluded the review initiated on May 31, 2012. Additional instrument ratings are given below. The review was triggered by CCC's announcement that it will be acquired by affiliates of Bain Capital Partners LLC. Bain will acquire CCC for approximately $800 million including estimated fees and expenses. Moody's also assigned ratings to the acquisition financing which includes a $370 million term loan and $250 million senior unsecured notes. Bain is expected to make a $180 million common equity contribution which will not have a liquidation preference, dividend, or accretion. The credit facilities also include a new $125 million asset-based revolver (not rated by Moody's) which is expected to be undrawn at the close of the transaction. The transaction is expected to close during the third quarter of 2012.

Moody's took the following actions:

-Confirmed B2 Corporate Family Rating

-Confirmed B2 Probability of Default Rating

-Confirmed $390 million PP&E term loan facility due 2014 B1 (LGD 3, 39%) (To be withdrawn after transaction closes)

-Confirmed $250 million second lien term loan due 2014 Caa1 (LGD 5, 79%) (To be withdrawn after transaction closes)

-Assigned $370 million Senior Secured Term Loan due 2019 B1 (LGD 3-37%)

-Assigned $250 million Senior Unsecured Notes due 2020 Caa1 (LGD 5-83%)

The ratings outlook is stable.

RATINGS RATIONALE

The confirmation of the B2 Corporate Family Rating and stable outlook reflect proforma credit metrics that are weak for, but still within the rating category, an expectation of an improvement in operating performance, management's pledge to direct all free cash flow to debt reduction, and good liquidity. CCC should benefit from already contracted higher margin new business and previously completed and ongoing cost-cutting and productivity initiatives over the rating horizon. Additionally, CCC has limited business up for renewal over the rating horizon. The new ultimate holding company will be structured a C corporation which will require CCC to begin to pay taxes, but the company is expected to benefit from a tax shield from the asset step-ups. However, CCC is weakly positioned in the rating category with little room for negative operating variance and will need to execute on its plan in order to maintain its current rating.

The ratings could be downgraded if credit metrics or liquidity deteriorate or if there is a deterioration in the operating and competitive environment. Specifically, the ratings could be downgraded if debt to EBITDA rises above 6.0 times, EBIT to interest coverage falls below 1.3 times, the EBIT margin declines below 7.5% and/or free cash flow to debt does not improve to the mid single digits.

A ratings upgrade is unlikely in the near term given the recent LBO and stretched credit metrics. The ratings could be upgraded if CCC improved its credit metrics while maintaining an adequate level of capital expenditures and good liquidity on a sustained basis within the context of a stable competitive and operating environment. Specifically, the ratings could be upgraded if debt to EBITDA declined below 5.0 times, the EBIT margin remains above 8.0%, EBIT to interest coverage rises above 1.8 times, and free cash flow to debt improves to above 9.5%.

The principal methodology used in rating Consolidated container Company LLC was the Global Packaging Manufacturers: Metal, Glass, and Plastic Containers Industry Methodology published in June 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009 Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Based in Atlanta, Georgia, Consolidated container Company LLC ("CCC") is a domestic developer, manufacturer and marketer of rigid plastic containers for mostly branded consumer products and beverage companies. End markets include the dairy, water, other beverage (juice, teas), food, household chemical, automotive, agricultural, and industrial chemical sectors. Dairy is the largest end market accounting for approximately 36% of sales in 2011. Approximately 97% of 2011 revenue was generated domestically. Revenues for the twelve months ended March 31, 2012 were approximately $739 million.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following : parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a 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.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Edward Schmidt
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Brian Oak
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's confirms Consolidated Container's B2 CFR, ends review, rates new debt
No Related Data.
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