Fitch rates Solo Cup loans B+, CCC+, notes CCC

Fitch Ratings said it initiated the following ratings for Solo Cup Co.: issuer default rating B-, senior secured first-lien credit facility B+/Recovery rating (RR) 2, senior secured second-lien credit facility CCC+/RR5 and senior subordinated notes CCC/RR6.

The outlook is negative.

The company's Canadian bank debt is excluded from the ratings, the agency said.

The ratings reflect Fitch's concern about the company's negative operating and free cash flow, high leverage, a lengthy and difficult integration process associated with the SF Holdings acquisition, margin contraction due to higher resin and energy prices, material weaknesses in internal accounting controls, low unit volume growth and management turnover in the past year.

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