Fitch Rates Corporacion Durango S.A.B. de C.V.'s Notes 'CCC/RR4'

CHICAGO--(Business Wire)--
Fitch Ratings has upgraded the foreign and local currency Issuer Default Ratings
(IDR) of Corporacion Durango S.A.B. de C.V. (Durango) to 'CCC' from 'D'. In
conjunction with this rating action, Fitch has rated the company's notes due in
2016 'CCC/RR4'. Simultaneously, Fitch has affirmed and withdrawn the 'CC/RR4'
rating of the company's 2017 notes.

Debt Restructuring Concluded:

Fitch's rating actions follow today's announcement by Durango that its debt
restructuring proposal has formally been concluded. As a result of this process,
holders of USD 357 million of the company's USD 508.5 million outstanding 2017
notes have exchanged their notes for USD 250 million of senior notes due 2016.
These investors also received a one-time payment of USD 10 million and have
received a 6% equity stake in the company. A company related to Durango's
controlling shareholders, exchanged its ownership of USD 151 million of the 2017
notes for 35% of the company's common shares. On a pro forma basis, these two
transactions will reduce Durango's total debt to USD 263 million from USD 522
million.

Leverage Will Remain High:

The 'CCC' rating of Durango continues to reflect substantial credit risk due to
high leverage, weak domestic demand for the company's packaging products and
intense competition. Durango generated USD 21 million of EBITDA during 2008, a
sharp decline from USD 95 million in 2007 and USD 114 million in 2006. The
decline was primarily driven by higher costs for energy and recycled fiber,
while prices remained relatively stagnant. As a result, the margin between
Durango's per ton revenues and unit cost decreased to USD 38 per ton during 2008
from USD 83 per ton in 2007 and USD 93 per ton in 2006.

Medium and Long-Term Credit Concerns Include Volatile Cost Structure, Need to
Supply Financing to Customers, and Global Competitiveness:

The ratings of Durango reflect its inability to control its cost structure as of
result of volatile energy and recycled fiber prices. A catalyst for rising
recycled paper prices in Mexico and the U.S. was strong demand from China. Until
Durango collects more recycled fiber through its collection networks in the U.S.
and Mexico, it will remain vulnerable to Chinese purchases in these markets. The
weakness in the U.S. market has increased exports to Mexico and heightened
competition for Durango. Many of these competitors have greater financial
resources than Durango; this will present challenges to Durango as it seeks to
improve financing terms with its clients. The company's tight liquidity will
also limit capital expenditures, thereby diminishing Durango's ability to
improve its global competitiveness.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, 'www.fitchratings.com'. Published ratings, criteria
and methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Joe Bormann, CFA, 312-368-3349 (Chicago)
Albert Moreno, 818-335-7239 (Monterrey)
Media Relations, New York
Brian Bertsch, 212-908-0549
brian.bertsch@fitchratings.com;
Cindy Stoller, 212-908-0526
cindy.stoller@fitchratings.com

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