S&P rates Multi Packaging loans B+, notes CCC+

Standard & Poor's said it affirmed its B corporate credit rating on Multi Packaging Solutions Inc. and its wholly owned subsidiary John Henry Holdings Inc. The outlook is stable.

S&P removed all ratings from CreditWatch, where they had been placed on July 9 with negative implications following the announcement that private equity firm Madison Dearborn Partners had agreed to acquire Multi Packaging from equity sponsor Irving Place Capital.

S&P also assigned a B+ issue-level rating to the company's proposed $50 million revolving credit facility and $280 million senior secured term loan. The recovery rating is 2, indicating an expectation for substantial (70% to 90%) recovery in the event of a payment default.

The agency also assigned a CCC+ issue-level rating to the proposed $200 million senior unsecured notes, with a recovery rating of 6, indicating an expectation of negligible (0% to 10%) recovery in the event of a payment default.

"Upon close of the transaction, we expect adjusted debt to EBITDA to approach 6x, and the key ratio of funds from operations to total adjusted debt of about 10%," said S&P credit analyst Daniel Krauss in a news release.

"Based on our scenario forecasts for gradual earnings growth and modest debt reduction over the next year," he added, "we expect that credit metrics will gradually strengthen, with FFO to debt of above 10% and debt to EBITDA of about 5.5x, in line with our expectations at the current rating."

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