S&P rates Graham Packaging, loan B, notes CCC+

S&P said it assigned a B issuer rating to Graham Packaging Co. Inc. The company is planning to fund a $1.92 billion distribution to its parent Reynolds Group Holdings Ltd.

The agency also assigned a B issue-level rating and 3 recovery rating to the company’s proposed $100 million revolving credit facility and $1.41 billion first-lien term loan. S&P assigned a CCC+ issue-level rating and 6 recovery rating to the company’s proposed $510 million of senior unsecured notes.

After the distribution, Graham will become an unrestricted wholly owned subsidiary of Reynolds.

“Graham will be operating with a significant debt load pro forma for this transaction, with debt leverage of about 6x. That said, we expect the company’s predictable and recurring business model will effectively support the large debt load and can provide modest debt repayment beyond its minimal required amortization given our expectations for free cash flows,” S&P said in a press release.

The outlook is stable.

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