Moody's cuts American Achievement, rates notes Caa1

Moody's Investors Service said it assigned a Caa1 rating to the proposed $85 million senior unsecured discount notes to be issued by AAC Group Holding Corp. and affirmed its subsidiary American Achievement Corp.'s existing ratings.

In addition, Moody's lowered the senior implied rating from B1 to B2 and the senior unsecured issuer rating from B2 to Caa1 while moving both ratings from American Achievement to the new borrower AAC Holdco. The outlook remains stable.

Moody's affirmed American Achievement's B1 rated $40 million senior secured revolving credit due 2006 and $155 million senior secured term loan due 2011, B2 rated $6 million senior unsecured notes due 2007 and B3 rated $150 million senior subordinated notes due 2012.

Moody's said the change in the senior implied rating reflects the higher level of financial and operating risks and resulting weaker credit protection measures going forward due to the increase in enterprise debt that is to fund a distribution to existing shareholders less than nine months after their purchase of this company.

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