S&P lowers LABL, rates loans B-

S&P said it lowered its rating on LABL Inc. (Multi-Color Corp.) and assigned B- issue and 3 recovery ratings to the company’s new revolving credit facility and first-lien term loans.

Clayton, Dubilier & Rice agreed to acquire LABL from Platinum Equity and Fort Dearborn Holding Co. Inc. from Advent International and intends to combine the companies to create the world's largest label provider.

The company will fund the acquisition with a $500 million asset-based lending facility, a $200 million revolving credit facility, $1.972 billion of first-lien term loans split between a dollar-denominated tranche and euro-denominated tranche, $460 million of senior unsecured debt and $750 million of other senior secured debt.

CD&R will use the term loans to refinance LABL’s outstanding term loans.

It plans to roll over its $700 million of secured notes and $690 million of unsecured notes into the new capital structure.

“We project the company's S&P Global Ratings-adjusted leverage will remain elevated at 7.5x-8x for the 12 months following its merger with Fort Dearborn. In July, CD&R announced that it would acquire and combine LABL with Fort Dearborn in a transaction valued at about $5.82 billion,” the agency said in a press release.

The outlook is stable.

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