S&P lifts Schoeller Arca Systems view to stable

Standard & Poor's said it revised the outlook on Schoeller Arca Systems Holding BV to stable from negative.

The agency also said it affirmed the long-term corporate credit rating on the company at CCC, along with its term loans A1 and B1 at CCC+. The recovery rating on this debt is unchanged at 2, indicating 70% to 90% expected recovery in a default.

S&P affirmed the rating on Schoeller's subordinated €10.1 million term loan B2 tranche at CC, two notches below the corporate credit rating. The recovery rating is unchanged at 6, indicating 0% to 10% expected recovery in a default.

The outlook revision reflects a view that Schoeller is making good progress with several of its strategic initiatives, including a proposed merger and integration with returnable transit packaging company Linpac Allibert, the agency said.

Furthermore, Schoeller recently reached an agreement with its banking group to reset its covenants, which were very tight and in danger of being breached, S&P said.

Also, a timely cash injection from majority shareholder One Equity Partners has helped ease liquidity risks, particularly in the United States, the agency said.

The ratings continue to reflect the company's weak liquidity profile and its very aggressive financial policy, evident from its highly leveraged capital structure and weak credit metrics, S&P said.

These weaknesses are partially mitigated by Schoeller's leading market position in the niche and competitive reusable plastic container market and improving customer diversity, the agency added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.