Moody's affirms Appleton

Moody's Investors Service said it affirmed Appleton Papers Inc.'s corporate family rating of B2 and changed its probability of default rating to B2/LD from Caa3, following the company's announcement that its tender offer, which was extended to all of its senior noteholders on Sept. 17, had expired on Sept. 25.

Subsequent to the offer, about 84% of Appleton's outstanding senior unsecured notes and 77% of its outstanding senior subordinated notes were tendered at substantial discounts to par, the agency noted.

The senior unsecured notes were downgraded to Caa1 from B3 and the senior subordinated notes were restored to their pre-tender offer rating level of Caa1, the agency said.

According to Moody's, Appleton's B2 corporate family rating reflects expected challenges with respect to tight covenant compliance and weak liquidity; eroding credit metrics; continued declines in the carbonless paper segment; and the lower margins associated with a migration away from the carbonless paper segment.

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