PE Debt Watch (Downgrades & Upgrades)
As usual, we have a week's worth of ratings actions on the debt of LBO-backed companies from ratings agencies Standard & Poor's Ratings Agency and Moody's Investors Service. This week is a big update coming off of the holiday, with five upgrades four downgrades and a withdrawal. Downgrades include companies owned by GTCR Golder Rauner, Kohlberg & Co., Genstar Capital, and DLJ Merchant Banking Partners. Company: Cellu Tissue Holdings Sponsor: Weston Presidio Action: Moody's upgraded the company’s probability of default rating and the senior secured notes rating of the company to ‘B1’ from ‘B2’. S&P raised its corporate credit rating on Alpharetta, Ga.-based Cellu Tissue Holdings Inc. to 'B+' from 'B'. Highlight: From Moody’s: The upgrade to B1 reflects steady margin expansion and earnings growth since the fiscal year ended February 28, 2007, resulting in EBITDA generation considerably higher than previously expected. From S&P: "The upgrade reflects the significant improvement in Cellu Tissue's EBITDA in the last three quarters, due to its acquisition of Atlantic Paper & Foil in mid-2008, benefits from capacity expansion initiatives to meet higher demand for its converted tissue products, and sales price increases," said Standard & Poor's credit analyst Andy Sookram.
