Fitch affirms Kappa Beheer

Fitch Ratings said it affirmed the rating for Kappa Beheer BV's senior notes at B. At the same time the agency affirmed parent company Kappa Packaging BV's senior unsecured rating at B+ and its senior secured rating at BB. The short-term rating is affirmed at B.

The outlook remains stable.

"Despite a difficult operating environment both profitability and cash flow generation have remained in line with our expectations as management have preserved margins by focusing on higher value-added products and maintaining a tight control on costs," said Daragh Murphy, associate director in Fitch's leveraged finance group.

The ratings reflect Kappa's leading market position and low cost position in the sector, balanced by the current high leverage and the need to maintain high levels of cash flow generation to meet the increasing mandatory debt amortization payments. The substantial liquidity in the form of €227 million of cash on the balance sheet and €248 million available under the revolving credit facility provide Kappa with significant financial flexibility.

Kappa Beheer's notes affirmed include the €370 million 10.625% senior subordinated notes due 2009 at B, the $100 million 10.625% senior subordinated notes due 2009 at B, the €145 million 12.5% senior subordinated discount notes due 2009 at B, and the €95 million 10.625% senior subordinated notes due 2009 at B.

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