Moody's: Lecta outlook stable

Moody's Investors Service said it changed the outlook on Lecta SA to stable from negative and affirmed its B2 corporate family and the B2 probability-of-default ratings as well as its B2 rating on the €598 million senior secured floating-rate notes due 2014 and the Caa1 rating (LGD5, 77% from 82%) of its €150 million senior unsecured floating-rate notes due 2014.

"The outlook change to stable was prompted by Lecta's relatively robust operating performance and cash flow generation during the course of 2009, despite a significant volume contraction for coated fine paper," Christian Hendker, a Moody's assistant vice president, said in a statement.

Lecta's performance was supported by a contraction in input costs, the agency noted.

The B2 rating reflects Lecta's leading market position, favorable product mix as well as proximity to customers, the agency said.

The rating benefits from Lecta's continued ability to generate positive free cash flows, Moody's added.

The rating remains constrained by Lecta's highly leveraged capital structure, with a net debt-to-EBITDA ratio of slightly above 7x in the last 12 months ending September, the agency said.

The rating also considers Lecta's small absolute scale, its regional concentration and its segmental focus on coated fine paper, the agency noted.

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