Moody's lowers Chesapeake

Moody's Investors Service said it downgraded Chesapeake Corp.'s corporate family rating and probability of default rating to Ca from Caa2.

Concurrently, Moody's said it downgraded the company's senior unsecured revenue bonds to Ca from Caa3 and senior subordinated notes to C from Caa3.

The corporate family rating, probability of default rating, and revenue bonds remain on review for possible downgrade, the agency noted, adding that the downgrade to Ca reflects Moody's opinion that an event of default is highly likely in the near term.

This action was prompted by cautionary language contained in the company's 10-Q filing for the period ending Sept. 28, which stated it anticipated that the lenders of the $250 million senior secured revolving credit facility (unrated by Moody's) would issue a payment blockage notice preventing Chesapeake from making a scheduled interest payment due Nov. 15 on the sterling-denominated senior subordinated notes, Moody's said.

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