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04 Dec 2009
Approximately $160 Million of Rated Debt Securities Affected
New York, December 04, 2009 -- Moody's Investors Service ("Moody's") upgraded the Corporate
Family Rating of Viskase Companies, Inc. ("Viskase")
to B2 from Caa1 and revised the ratings outlook to stable from negative.
Moody's also upgraded the speculative grade liquidity rating to
SGL 2 from SGL 4 and assigned a B2 rating to the new $160 million
senior secured notes due 2017. Other instrument ratings are detailed
On December 4, 2009, Viskase launched the sale of $160
million of senior secured notes due in 2017. The proceeds from
the transaction will be used to repay outstanding borrowings under the
company's $25 million revolving facility (not rated by Moody's),
redeem the outstanding 11.5% senior secured notes due 2011
and repay a capital lease obligation. The balance of the proceeds
will be used for general corporate purposes and to pay transaction fees
and expenses. The borrower will be Viskase Companies, Inc.
The upgrade of the Corporate Family Rating and outlook reflects the significant
improvement in the competitive environment, the company's
success in its productivity initiatives and the improvement in credit
metrics. The upgrade also reflects an anticipation of continued
tight industry capacity and strong end user demand over the rating horizon,
the improved liquidity resulting from the transaction, and the current
level of cushion Viskase has within the rating category. Tight
industry capacity has enabled several product price increases which have
improved profitability and credit metrics. Profitability has been
further bolstered by the company's productivity initiatives.
Industry capacity is anticipated to remain tight and demand strong over
the rating horizon.
The ratings are constrained by the company's lack of scale, concentration
of sales, and lack of long term contracts with customers.
The rating also reflects the nascent competitive equilibrium, foreign
currency exposure and primarily commoditized product line. The
company's revenue base is small for the rating category and highly
concentrated in one product line. Approximately 50% of sales
are in foreign currencies while all debt is denominated in U.S
dollars. While industry overcapacity has been eliminated and pricing
power restored, the competitive equilibrium has only recently been
established and does not yet have a long term track record.
The upgrade of the speculative grade liquidity rating to SGL-2
from SGL-4 reflects the pro-forma full availability under
the $25 million asset based revolver (not rated by Moody's)
and relatively significant cash balance as well as an anticipation of
adequate free cash flow.
Moody's took the following rating actions for Viskase Companies,
Upgraded Corporate Family Rating to B2 from Caa1
Upgraded Probability of Default Rating to B2 from Caa1
Assigned $160 million senior secured notes due 2017 B2 (LGD 3 45%)
Upgraded $98 million 11.5% senior secured notes due
2011 to B2 (LGD 3 45%) from Caa1 (LGD 4, 54%) (to
be withdrawn upon completion of the transaction)
Upgraded Speculative Grade Liquidity Rating to SGL-2 from SGL-4
The rating outlook is revised to stable from negative.
The ratings are subject to receipt and review of the final documentation.
Moody's last rating action on Viskase occurred on October 30, 2008
when Moody's revised outlook to negative and affirmed the company's
Caa1 corporate family rating . The principal methodology used in
rating Viskase was the "Global Packaging Manufacturers: Metals,
Glass and Plastic Containers" rating methodology dated June 30,
2009 and accessible at 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
be found in the Rating Methodologies sub-directory on Moody's
Headquartered in Darien, Illinois, Viskase Companies,
Inc. (Viskase) is a producer of cellulose, fibrous and plastic
casings for hot dogs and sausages, lunch meats, hams and other
processed meat and poultry products. Revenues for the twelve months
ended September 30, 2009, were $291 million.
Corporate Finance Group
Moody's Investors Service
Moody's upgrades Viskase CFR to B2; rates new sr secured notes; outlook revised to stable
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
No Related Data.
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