Moody's lifts CEDC to B1

Moody's Investors Service said it upgraded Central European Distribution Corp.'s corporate family rating to B1 from B2, assigned a B1 probability-of-default rating to the company and confirmed its €260 million 8% senior secured notes due 2012 at B2 (LGD4, 68%).

This concludes the review for upgrade begun on March 14, and the outlook is stable.

The agency said the upgrade reflects improvements in CEDC's operating performance and the reduction in what Moody's perceives as the integration risk following the acquisition of Bols and Bialystok in 2005. The operating margin was 9.8% for 2006, up from 6.8% one year before, and the strong cash flow characteristic of its production business allowed the company to reduce leverage to 3.7x.

CEDC's B1 corporate family rating balances the company's leading market position as a vodka producer and its extended distribution network in Poland against its limited geographic and product diversification compared with other alcoholic beverage producers and event risk, as it is likely the company will continue to seek growth through further acquisitions, Moody's said.

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