Crown Cork & Seal Company (CCK)

The worldwide food and beverage can markets have experienced limited growth in demand in recent years. Food and beverage cans are standardized products, allowing for relatively little differentiation among competitors. This has led to overcapacity and price competition among food and beverage producers, as capacity growth outpaced the growth in demand for food and beverage cans and overall manufacturing capacity exceeded demand.

Crown Holdings is highly leveraged with $3.5 billion of total indebtedness and shareholders’ deficit of $545 million^[1]. As a result of its substantial indebtedness, a significant portion of CCK's cash flow is required to pay interest and principal on its outstanding indebtedness and Crown may not generate sufficient cash flow from operations, or have future borrowings available under its credit facilities, to enable it to pay its indebtedness or to fund other liquidity needs.

The Company has significant pension plan obligations worldwide and significant unfunded U.S. postretirement obligations (by approximately $134 million^[1]), which could reduce its cash flow and negatively impact its financial condition.