S&P puts Knowlton on positive watch

S&P said it placed all its Knowlton Development Holdco Inc., ratings, including its B- issuer rating, on CreditWatch with positive implications.

“The CreditWatch placement follows KDC's S-1 filing and announcement of the launch of the company's IPO transaction. According to the public prospectus filed Sept 14, we expect the company will raise approximately $750 million-$800 million. Knowlton will likely use the proceeds to repay its revolver and euro term loan, as well as for fees and expenses,” S&P said in a press release.

The agency noted if KDC uses the proceeds for repaying debt, it could lower its pro forma leverage up to the mid-5x area from 10x as of fiscal 2021. At July 31, the company’s reported debt was about $1.7 billion.

“The CreditWatch placement reflects the potential for a one-notch upgrade, depending on the extent of debt repayment and leverage reduction. We will resolve the CreditWatch on conclusion of IPO transaction, once we have confirmation on the pro forma capital structure and assess the company's financial policy,” S&P said.

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