Approximately $3.7 billion of rated debt affected
New York, January 19, 2011 -- Moody's Investors Service ("Moody's") revised
the ratings outlook of Crown, Cork & Seal Company, Inc.
("Crown") to positive from stable and affirmed the Ba2 Corporate
Family Rating. Moody's also assigned a Ba3 rating to the new senior
unsecured notes of Crown Americas, LLC and affirmed the SGL-2
speculative grade liquidity rating.
The rating assignment follows Crown's announcement that it intends
to offer $700 million of senior unsecured notes due 2021 in a private
placement. The proceeds of the issue will be used to retire all
of the company's outstanding $600 million senior unsecured
notes due 2015. The issuance will have a largely neutral effect
on the company's credit metrics but will extend the maturity profile.
Moody's took the following rating actions for Crown Americas, LLC:
-Assigned $700 million senior notes due 2021, Ba3
(LGD 4, 65%)
-Affirmed $450 million US Revolving Credit Facility due
2015, Baa2 (LGD 1, 8% from LGD 1, 9%)
-Affirmed $130 million US Revolving Credit Facility due
2011, Baa2 (LGD 1, 8% from LGD 1, 9%)
(LGD 1, 9%)
-Affirmed $365 million US Term Loan B due 2012 ($150
million outstanding), Baa2 (LGD 1, 8% from LGD 1,
9%)
-Affirmed $600 million senior unsecured notes due 2015,
Ba3 (LGD 4, 65%) (To be withdrawn once the transaction closes)
-Affirmed $400 million senior unsecured notes due 2017,
Ba3 (LGD 4, 65%)
Moody's took the following rating actions for Crown Cork & Seal
Company, Inc.
-Affirmed corporate family rating, Ba2
-Affirmed probability of default rating, Ba2
-Affirmed speculative grade liquidity rating, SGL-2
-Affirmed $150 million senior unsecured notes due 2096 ($64
million outstanding), B1 (LGD 6, 94%)
-Affirmed $350 million senior unsecured notes due 2026,
B1 (LGD 6, 94%)
Moody's took the following rating actions for Crown European Holdings
S.A.
-Affirmed $700 million European revolving credit facility
due 2015, Baa2 (LGD 1, 8% from LGD 1, 9%)
-Affirmed $63 million European revolving credit facility
due 2011, Baa2 (LGD 1, 8% from LGD 1, 9%)
-Affirmed 111 million Euro Term Loan B due 2012, Baa2
(LGD 1, 8% from LGD 1, 9%)
-Affirmed 460 million 6.25% First Lien Notes
due 2011 (85 million outstanding), Baa2 (LGD 2, 11%)
-Affirmed 500 million 7.125% global notes due
8/15/2018, Ba1 (LGD 2, 26% from LGD 2, 27%)
Moody's took the following rating actions for Crown Metal Packaging Canada
L.P.
-Affirmed $50 million Canadian revolving credit facility
due 2015, Baa2 (LGD 1, 8% from LGD 1, 9%)
The rating outlook is revised to positive from stable.
RATINGS RATIONALE
The revision of the outlook to positive from stable reflects an expectation
that Crown's credit metrics will improve sustainably to the stated
rating triggers over the rating horizon. Much of the company's
previous and planned capacity expansion in emerging markets is sold out
and should drive measurable improvements in EBITDA and cash flow.
Moreover, Moody's expects that the company will continue to
maintain conservative financial policies.
Crown's Ba2 Corporate Family Rating reflects the company's position in
an oligopolistic industry, relatively stable end markets and improved
profitability. The rating is also supported by the high percentage
of business under contract with strong raw material cost pass through
provisions, higher margin growth projects in emerging markets and
good liquidity. Crown's broad geographic exposure, including
a high percentage of sales from faster growing developing markets,
is both a benefit and a source of some potential volatility.
The rating is constrained by the company's concentration of sales,
exposure to international markets and risks inherent in its strategy to
grow in emerging markets. The rating is also constrained by the
ongoing asbestos liability. The company has exposure to segments
which can be affected by weather and crop harvests and to mature industry
sectors like carbonated soft drinks. Approximately 40% of
sales stem from beverage can segment. Crown is also completely
concentrated in metal packaging, which may be subject to substitution
with other substrates in certain markets depending on relative pricing
and new technologies.
What Could Change the Rating - Down
The ratings could be downgraded if there was deterioration in the credit
metrics, more aggressive financial policies, deterioration
in the cushion under existing financial covenants, and/or deterioration
in the competitive or operating environment. Specifically,
the rating could be downgraded if the EBIT margin moved below the low
teen range, leverage moved above 4.0 times and free cash
flow to debt moved below 7%.
What Could Change the Rating - Up
The ratings could be upgraded if Crown achieves a sustainable improvement
in credit metrics and maintains conservative financial policies and cushion
under existing financial covenants within the context of a stable operating
and competitive environment. Specifically, the ratings could
be upgraded if leverage remained below 3.7 times, the EBIT
margin remains in the double digits and free cash flow to total debt improves
to over 9%.
The principal methodologies used in this rating were Global Packing Manufacturers:
Metal, Glass, and Plastic Containers published in June 2009,
Loss Given Default for Speculative-Grade Non-Financial Companies
in the U.S., Canada and EMEA published in June 2009,
and Speculative Grade Liquidity Ratings published in September 2002
REGULATORY DISCLOSURES
Information sources used to prepare the credit 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 Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
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.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service 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 the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
New York
Edward Schmidt
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Glenn B. Eckert
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's revises Crown's outlook to positive, affirms Ba2, assigns Ba3 to new notes