Moody's cuts Yioula outlook to negative

Moody's Investors Service said it changed the outlook to negative from stable on the corporate family rating of Yioula Glassworks SA and affirmed the B2 rating as well as the B3 rating for the €140 million senior notes due in 2015.

"The change in outlook to negative reflects the weakened profitability due to rising input costs, most notably natural gas and also increased leverage as a consequence of higher investments into its asset base in Romania, Bulgaria and the Ukraine," said Martin Kohlhase, Moody's said it said it lead analyst for the European packaging industry.

This expansion into its asset base with expected peak capital expenditures in 2006 of more than €40 million and additional expenditure of €30 million in 2007 is expected to result in negative free cash flow for the forthcoming fiscal year, Moody's noted.

The agency said it also believes that the growing shift towards countries outside of the domestic market will put additional pressure on management.

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