Fitch lifts Solo Cup view to positive

Fitch Ratings said it revised Solo Cup Co.'s outlook to positive from stable and affirmed its issuer default rating at B-, its senior secured term loan and revolving credit facility at BB-/RR1 and its senior subordinated notes at CCC+/RR5.

The agency said the outlook revision is based on positive operating trends and continued execution of the company's turnaround strategy, which offset concerns about potentially weaker volumes and cost inflation. In addition, Solo has resolved all outstanding material weaknesses in internal controls.

The ratings recognize Solo's leading market share across its product categories, strong brand recognition, diversified raw materials mix, diverse and stable customer base and modest near-term debt maturities, Fitch said.

Concerns center on high leverage, margin and volume pressure due to intense competition and cost inflation in resin and energy prices, the agency said. Fitch also expects softer industry volumes in the coming year.

Solo achieved meaningful debt reduction in 2007 and, as a result, total leverage declined to 5.7 times at the end of 2007 from 9.8 times at April 1, 2007, Fitch added.

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