Moody’s: Novolex view to stable

Moody's Investors Service said it affirmed the B2 corporate family rating and B2-PD probability of default rating of Novolex Holdings, Inc. and revised the outlook to stable from negative.

The agency also affirmed all instrument ratings, including the B1 rating on the upsized first-lien senior secured term loan issued by Novolex's direct subsidiary, Hilex Poly Co., LLC.

The company plans to use proceeds from a $295 million add-on to the term loan additional subordinated debt (unrated) to fund the acquisition of Texas-based can liner manufacturer, Heritage Bag Co., and related fees and expenses.

"We affirmed Novolex's ratings and revised the outlook to stable from negative despite a pending debt-financed acquisition because the company now has a track record of successfully integrating several large acquisitions completed in the last two years," Moody's analyst Anastasija Johnson said in a news release.

"The rating action also reflects expectations that the purchase of Heritage Bag will solidify the company's position in the can liner business and that Novolex will delever to low 5 times in the next 12 to 18 months."

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