S&P rates Verallia notes CCC+

S&P said it affirmed its B long-term corporate credit rating on Horizon Holdings I SAS, the France-based financial holding company for Verallia.

The agency also affirmed the B long-term corporate credit rating on Verallia's finance subsidiary, Verallia Packaging SAS.

At the same time, S&P assigned a B long-term corporate credit rating to Horizon Parent Holdings Sarl.

The outlook on all three companies is stable.

S&P said it assigned a CCC+ issue rating to the proposed €350 million payment-in-kind (PIK) toggle notes due in 2022, to be issued by Horizon Parent Holdings. 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.

At the same time, the agency said it affirmed the B issue ratings on the existing €500 million senior secured notes, €250 million senior secured revolving credit facility and €1,375,000,000 term B loan issued by Verallia Packaging, in line with the corporate credit rating. The 3 recovery ratings are unchanged, reflecting an expectation of meaningful recovery in the upper half of the 50%-70% range for the secured lenders in the event of a payment default.

Furthermore, S&P affirmed the CCC+ issue rating on the €225 million senior unsecured notes issued by Horizon Holdings I. The issue rating is two notches below the corporate credit rating on the consolidated group, reflecting an expectation of negligible recovery (0%-10%) for the holders of the unsecured notes in the event of a payment default.

Verallia announced that it intends to issue €350 million in new payment-in-kind (PIK) toggle notes from Horizon Parent Holdings in order to make a distribution to shareholders and €60 million cash overfunding, part of it coming from the reinvestment proceeds from Bpifrance, the minority shareholder. The transaction will result in weakened credit metrics, but these are in line with expectations for the rating, S&P explained.

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