S&P slashes Glatfelter

S&P said it dropped Glatfelter Corp.’s issuer rating to CCC+ from B+ and its senior unsecured notes to CCC from B.

“Glatfelter's EBITDA is about 20% lower year over year, even after closing almost $500 million of debt-funded acquisitions in 2021. We lowered our expectations for revenue and EBITDA in 2022 and 2023, which will raise S&P Global Ratings-adjusted leverage in both years, compounded by negative FOCF in 2022. A severe drop-off in volume shipped due to lower wall cover base paper and tea filter products shipments to customers in Russia and Ukraine, along with a spike in raw materials and energy costs, and a gap in price response have contributed to 500 basis points lower gross and EBITDA margins,” said S&P in a press release.

The agency said it now forecasts S&P Global Ratings-adjusted leverage will stay above 6x even at the end of 2023, almost two turns higher than its previous forecast. “The combination of high leverage and weak FOCF places Glatfelter's capital structure under pressure, ahead of its upcoming debt maturity in early 2024.”

The outlook is negative.

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