Moody’s eyes Clearwater Paper for trim

Moody’s Investors Service said it placed Clearwater Paper Corp.’s Ba2 corporate family rating, Ba2-PD probability of default rating and Ba3 senior unsecured notes rating on review for downgrade. Clearwater's speculative grade liquidity rating remains unchanged at SGL-1. Previously, the outlook was stable.

The company’s Tuesday announcement that it agreed to buy Graphic Packaging International, LLC's bleached paperboard manufacturing facility in Augusta, Georgia for $700 million triggered the review, Moody’s said. Clearwater plans to use $490 million in new secured debt to help fund the deal. It also said it will explore options for its tissue business, which could include a sale.

The deal is expected to close in the second quarter of 2024 and is subject to various closing conditions, including regulatory approvals.

“Based on the proposed capital structure, the Ba3 rating on the senior unsecured notes is likely to be downgraded by at least one notch due to the significant increase in the amount of secured debt which will rank ahead of the unsecured obligations,” the agency said in a press release.

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