Moody’s changes CCL view to negative

Moody's Investors Service said it affirmed CCL Industries Inc.'s Baa2 senior unsecured notes ratings and changed the outlook to negative from stable following the company's announced acquisition of the Innovia Group of companies (B1 stable) for an enterprise value of C$1.13 billion.

CCL plans to fund the acquisition with new debt and drawings under its $1.2 billion revolver. The transaction is subject to regulatory approval and is expected to close in the first quarter of 2017.

CCL's pro forma leverage will increase by 0.9 times to 3.2 times, which is high for the Baa2 rating, but Moody's expects it to decline toward 2.5 times within 18 months from solid free cash flow generation.

"The outlook is negative because this is a very large acquisition for CCL, with execution risks," Moody's assistant vice president Peter Adu said in a news release.

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