Moody's cuts Ardagh notes to B2, rates new notes B3

Moody's Investors Service said it assigned a rating of B3 to the proposed €125 million senior unsecured notes due 2015 of Caono plc, a new parent company of Ardagh Glass Ltd.

Moody's also downgraded the rating of €175 million of 8 7/8%senior notes due 2013 issued by Ardagh Glass Finance BV to B2 and reassigned issuer level ratings from subsidiaries to Caono (which intends to change its name to Ardagh Glass Group following a successful transaction). The outlook for all debt has been changed to stable.

Moody's said ratings of the existing notes were downgraded as a result of higher potential cash interest expense.

The new notes have the option of being paid in kind, but Moody's said it believes the downstreaming of proceeds as a capital contribution to Ardagh Glass will be sufficient to allow interest payments to be upstreamed through the restricted group at Ardagh Glass to pay debtholders of Caono.

The new ratings recognize the potential use of cash to pay interest on the new debt and also incorporate the risk of long term pressure on the capital structure in case interest is allowed to accrue, the rating agency said.

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