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S&P cuts Verallia, debt; rates notes CCC+
S&P said it lowered its long-term corporate credit rating on Horizon Holdings I (Verallia), the France-based financial holding company for glass packaging manufacturer Verallia, to B from B+.
The agency also downgraded the long-term corporate credit rating on Verallia's finance subsidiary, Verallia Packaging SAS, to B from B+.
In addition, S&P assigned its B long-term corporate credit rating to finance holding company Horizon Parent Holdings Sarl.
The outlook on all three companies is stable.
The agency assigned its CCC+ issue rating to the proposed new €500 million payment-in-kind (PIK) toggle notes due in 2021. The issue rating is two notches below the corporate credit rating on the consolidated group, reflecting a recovery rating of 6 and an expectation of negligible recovery (0%-10%) for the holders of the new subordinated PIK toggle notes in the event of a payment default.
S&P also downgraded the issue ratings on the existing €500 million senior secured notes, €250 million senior secured revolving credit facility and €1,375 million term loan issued by Verallia Packaging to B from B+, in line with the corporate credit rating. The 3 recovery ratings remain unchanged.
Furthermore, S&P lowered the issue rating on the €225 million senior unsecured notes issued by Horizon Holdings I to CCC+ from B-, two notches below the corporate credit rating, based upon a recovery rating of 6.
S&P said the downgrade follows Verallia's announcement that it intends to raise an additional €500 million of PIK toggle notes, to be issued by Horizon Parent Holdings. Proceeds are to be used to fund a €490 million distribution to shareholders. This follows the senior secured notes tap completed as recently as June, which was used to fund a €230 million distribution.
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