S&P lowers Kleopatra

S&P said it lowered the long-term issuer credit rating on Kleopatra Holdings 1 SCA to B- from B.

Kleopatra is the ultimate holding company of Kloeckner Pentaplast.

The agency said it lowered the long-term issuer credit ratings on Kleopatra Holdings 2 SCA and Kloeckner Pentaplast of America Inc.

The outlook is stable.

S&P also said it lowered the rating on the €150 million secured revolving credit facility and €1.4 billion equivalent senior secured term loan to B- from B. The loans have a 30% to 50% expected default recovery.

The agency also said it lowered the rating on the €395 million notes issued by Kleopatra Holdings 1 to CCC from CCC+. The recovery rating is unchanged at 6, indicating negligible chance of default recovery.

The downgrades are because the company underperformed on EBITDA expectations in the first months of 2018, S&P explained.

The revised EBITDA forecast and higher interest expenses result in weaker credit metrics for 2018 and 2019 that are no longer consistent with a B rating, the agency said.

S&P said it now expects adjusted EBITDA interest coverage will be about 1.6x and adjusted debt-to-EBITDA will be about 9x in 2019.

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