S&P cuts Ardagh outlook to negative

Standard & Poor's said it revised its outlook on Ardagh Glass Group plc and related entity Ardagh Glass Ltd. to negative from stable, following a deterioration of the group's operating environment. S&P also affirmed the companies' B+ corporate credit rating.

The outlook revision reflects S&P's view that the deterioration in Ardagh's operating environment could be sustained over the medium term, leading to further weakening of the group's operating and financial performance. Increased debt from the pay-in-kind notes that the group issued in 2005, together with weaker cash flows, are expected to have a negative impact on credit measures.

S&P said the ratings reflect the group's aggressive financial profile, limited diversification, high customer concentration and high dependence on the U.K. food and beverage market.

These factors are mitigated by the group's leading position and market share in the small but lucrative U.K. glass bottle market, as well as the fact that a large proportion of Ardagh's business is covered by multi-year contracts varying from one to three years, the agency said.

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