Moody’s cuts Guala PDR, rates notes B2

Moody's Investors Service said it affirmed the B2 corporate family rating of GCL Holdings SCA, the holding company of Guala Closures SpA.

Concurrently, the agency assigned a B2 rating to new €500 million senior secured floating-rate notes (FRNs) due 2021 to be issued by Guala Closures.

Moody's also downgraded the probability of default rating to B2-PD from B1-PD.

The outlook on all ratings is stable.

The ratings of the existing senior secured floating-rate notes and senior notes are not affected and will be withdrawn once the notes have been repaid.

Proceeds from the transaction will be used to: (a) Refinance existing facilities; (b) pay fees and expenses and; (c) reduce drawings on the super senior revolving credit facility (unrated) by about €7 million.

Moody’s said the affirmation of the corporate family rating reflects the following drivers: (a) High financial leverage that Moody's forecasts will be about 5.3 times as at Dec. 31; (b) improvement in the maturity profile of the group because the transaction will be used to refinance senior notes due 2018 and senior secured floating-rate notes due 2019 out to 2021. In addition, the company has received consent from lenders to extend the maturity of the revolver to March 2018; and (c) a modest improvement in free cash flow because the group will refinance existing senior notes with a relatively high coupon of 9.38%.

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