Moody's may downgrade Kappa Beheer

Moody's Investors Service said it placed all ratings of Kappa Beheer B.V. on review for possible downgrade following the company's recent announcement of the proposed merger with JSG Holdings plc.

Moody's said it understands that the share merger, which will also contain the payment of a consideration to the shareholders of Kappa will result in a new entity called Smurfit Kappa Group.

In Moody's opinion, the proposed merger will position Smurfit Kappa Group as the market leader in the corrugated and containerboard segments in Europe, thus enabling the company to benefit from a reduction in costs as well as in capacity through the rationalization of mills.

However, the rating agency also noted the merger is expected to pose significant challenges in terms of integration.

Affected ratings include the company's corporate family rating at Ba3, €145 million 12.5% guaranteed senior subordinated notes due 2009 rated B2, $100 million 10.625% guaranteed senior subordinated notes due 2009 rated B2, €370 million 10.625% guaranteed senior subordinated notes due 2009 rated B2 and €95 million 10.625% guaranteed senior subordinated notes due 2009 rated B2.

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