S&P assigns B to Lecta notes

S&P said it affirmed its B long-term and B short-term corporate credit ratings on Lecta SA.

The outlook is stable.

At the same time, the agency assigned its B issue rating to the proposed €590 million senior secured fixed-rate notes due 2023 and senior secured floating-rate notes due 2022. The recovery rating is 4, reflecting an expectation of recovery in the lower half of the 30%-50% range in the event of default.

S&P also affirmed its B issue and 4 recovery ratings on the existing senior secured fixed- and floating-rate notes.

Lecta intends to use the proceeds from the proposed issuance to fully refinance its existing debt. The agency will withdraw these ratings upon repayment of the facilities.

The affirmation follows Lecta's announcement that it intends to refinance its outstanding notes to extend its debt maturity profile. S&P said it thinks this transaction is positive because it enables Lecta to maintain a strong liquidity profile and removes material debt maturities for the coming six years. This in turn will enable the company to continue its strategic plan of expanding its specialty paper business to offset the structural decline in the core coated woodfree paper business.

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