LONG - BLL 6 7/8 12/15/&2010

BALL Corp is one of the leading beverage can producers operating in a

consolidated industry. Ball Corp together with Rexam and Crown & Silgan

accounts for 75% of the industries revenues and has demonstrated solid

profitability within its stable end markets where about 70% of its sales

is covered by long term contracts including provisions to pass through most

of its raw material risk. Ball Corp just completed a USD 577MM

debt financed acquisition in 10/2009 where they purchased

AB Inbev (ABI) plants at a forward EV/EBITDA multiple of 6.2x (before synergies) which

increases its exposure to the declining carbonated soft drinks segment.

However, the company has committed to address the slight leverage

increase to 3.5 - 3.75x with strong free cash flow which is expected to range

in the USD 200-300MM area. Ball Corp faces high client concentration

with little alternatives to its comoditized products for its end users and

high switching costs for its clients and the oligopolistic industry structure

results in very stable EBIT margins in the 8% area with a high customer

retention rate. BALL Corp recently closed 8 facilities and reduced head

count of 10.400 by 12%. Its pension plan is underfunded by USD 178MM

and in the past they have conducted significant share repurchases in

addition to some debt financed acquisitions, both of which will somewhat

constrain leeway with its debt covenant of 3.75x and interest covenant of 3.5x.

BALL Corp's liquidity is reasonable with USD 60MM cash on hand and

USD 550MM available under its USD 715MM revolver which is due 2011

and thereby needs to be addressed before 2012s mature. However,

refinancing risk looks manageable as of today and we have a constructive

view on 2012s at current levels.

Pro-forma debt post ABI acquisitions stands at USD 2.891bln as per acquisition

debt offering memo:

http://www.sec.gov/Archives/edgar/data/9389/000104746909007644/a2194183z...