Moody's affirms Tembec

Moody's Investors Service said it affirmed Tembec Industries Inc. B3 corporate family and probability of default ratings, along with the B3 (LGD 3, 44%) ratings on its senior secured note ratings in connection with the company's proposed $50 million add-on senior secured note offering.

The liquidity rating remains unchanged at SGL-2.

The outlook is stable.

The ratings reflects the company's significant exposure to the volatile market pulp and challenging wood products industry segments, its high leverage and negative free cash flow, Moody's said.

The rating also considers management's ability to extract operational improvements to enhance the company's below industry average operating margins and the company's execution on a number of cost reduction projects, the agency said.

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