S&P affirms Kloeckner on add-on

S&P said it affirmed the B long-term corporate credit rating on Kleopatra Holdings 2 SCA, the parent company of Kloeckner Pentaplast.

The agency also affirmed the B long-term corporate credit rating on Kleopatra Holdings 1 SCA, which is the ultimate holding company.

The affirmations follow the proposed re-pricing and €85 million add-on to the group’s existing term loan facilities due 2020.

The outlook is stable.

S&P also said it affirmed the B rating on the upsized first-lien term loans. The recovery rating on this debt is unchanged at 4.

The agency also said it affirmed the issue ratings on the company’s senior unsecured notes at CCC+ with a recovery rating of 6.

The re-pricing and tap of the loan do not result in a material change in adjusted credit metrics, as the incremental debt is largely offset by solid operating performance and reduced interest costs, S&P explained.

Kloeckner Pentaplast plans to use the proceeds of the add-on to fund the acquisition of Farmamak, the agency said, with the balance spent on future bolt-on acquisitions and general corporate purposes.

Pro forma leverage is expected to remain within expectations for the ratings at about 6.5x over the next two- to three-years, S&P said.

The agency said it forecasts some improvements in profitability, but expects the group will remain highly leveraged with limited prospects for significant debt reduction.

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