Moody’s rates Novolex loans B1, Caa1

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating with a negative outlook to Novolex Holdings, Inc., which owns Hilex Poly Co. LLC.

The review was prompted by the company's announcement that it entered into a definitive agreement to acquire Packaging Dynamics Corp. (B2 stable).

At the same time, the agency assigned a B1 rating to the $125 million five-year senior secured revolver and $840 million seven-year senior secured first-lien term loan. It also assigned a Caa1 rating to the $275 million 7˝-year second-lien senior secured term loan.

Novolex is raising $1.24 billion in credit facilities to fund the acquisition of Packaging Dynamics, including the repayment of its outstanding bonds and to refinance Hilex's outstanding credit facility.

Moody’s confirmed the B2 rating on the Hilex's existing credit facilities, but these ratings will be withdrawn after the acquisition closes. Moody's also withdrew Hilex's B2 corporate family rating and B2-PD probability of default rating.

The outlook is negative.

The agency said it will withdraw Packaging Dynamics's B2 corporate family rating, B2-PD probability of default rating and the B3 senior secured note rating after the acquisition closes and the company's debt is repaid.

The acquisition is expected to close in the fourth quarter 2014 after all the regulatory approvals are received.

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