DBRS confirms Transcontinental

DBRS said it confirmed the issuer rating and senior unsecured debt rating of Transcontinental Inc. at BBB (low) with stable trends after the announcement of a definitive agreement to acquire the assets of Coveris Americas.

Transcontinental is financing the acquisition with cash on hand, drawing on the current revolving credit facility, a new banking term loan and a C$250 million equity issuance.

The agency said acquisition significantly enhances Transcontinental’s penetration into the attractive flexible packaging industry, which is growing annually in the low- to mid-single-digit range and adds a portfolio of 3,500 clients.

Subsequent to the transaction, Transcontinental will move from being a top-20 participant in the North American flexible packaging market to a top-10 participant and would benefit from diversifying its geographic footprint, customer base, product offering and sector coverage, DBRS explained.

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