Moody's rates Greif notes B1

Moody's Investors Service said it confirmed the Ba2 corporate family rating and Ba2-PD probability of default rating on Greif, Inc.

Moody's also said it assigned a B1 (LGD 6) rating to the company's proposed $500 million senior unsecured notes, and confirmed the Ba3 (LGD 5) rating on its existing 7¾% senior unsecured notes.

The agency also confirmed the Ba3 (LGD 5) rating on the existing 7 3/8% senior unsecured notes of Greif Luxembourg Finance SCA.

The company's SGL-2 speculative grade liquidity rating was affirmed and the outlook is stable.

The proceeds will be used to acquire Caraustar Industries, Inc., Moody's explained.

The proceeds also will be used to redeem the 7¾% senior unsecured notes.

The confirmations conclude a review for downgrade that began in December when Greif announced that it would acquire Caraustar from H.I.G. Capital in a cash transaction valued at about $1.8 billion, the agency said.

The ratings reflect management's commitment to direct all free cash flow to debt reduction until credit metrics are restored to pre-acquisition levels, Moody's said.

The ratings also consider the projected benefits of price increases in the Caraustar segment and synergies, the agency added.

Greif's credit profile benefits from the company's significant size, market position and its geographic, customer and end-market diversity, Moody's said.

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