S&P lowers Caraustar view to negative

S&P said it revised the outlook on Caraustar Industries Inc. to negative from stable and affirmed its B+ corporate credit rating.

The agency also said it affirmed the BB rating on the company's $100 million secured asset-backed revolving facility due 2021 and B+ rating on the $860 million secured term loan due 2022.

The recovery rating on the ABL is 1, indicating 90% to 100% expected default recovery.

The recovery rating on the secured term loan is 3, indicating 50% to 70% expected default recovery.

The negative outlook reflects a view of the company's 7.8x debt-to-EBITDA ratio, which could remain elevated at more than 7x if EBITDA margins fail to recover in 2018, S&P said.

The agency also said it believes this improvement will be gradual as most price increases do not fully materialize until its second fiscal quarter, the agency said.

Caraustar may continue to face additional margin pressure from freight and transportation cost increases, S&P added.

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