25th Jan 2019 18:31
LONDON (Alliance News) - Investor's service Moody's on Friday placed RPC Group PLC's long-term issuer rating of Baa3 under review for downgrade.
The credit ratings agency said the rating is under review following RPC's takeover by funds managed by Apollo Management IX LP.
Moody's said the GBP3.32 billion takeover is "likely to result in a multi-notch downgrade" into non-investment grade territory.
The review, Moody's said, reflects the "significantly" higher debt the FTSE 250 plastic packaging company is expected to hold if the transaction goes ahead. RPC will take on GBP3.4 billion in debt compared to the GBP1.5 billion of debt its reported in September.
The review will focus on RPC's final capital structure, in particular, Moody's will focus on RPC's cash flow.
Moody's said: "The future strategy of RPC under the potential new ownership also remains unclear, in particular regarding acquisitions, divestitures or potential further synergies from past acquisitions or other operational improvements, and hence will also form part of Moody's
review.
"The review is likely to result in a multi-notch downgrade into non-investment grade territory, as the interim facilities agreement suggests a leverage that is more commensurate with
the single-B rating category."
Moody's added: "Prior to the review process, Moody's indicated that downward pressure on the rating could arise from a deterioration in credit metrics, or if RPC engages in actions which favour shareholders to the detriment of its credit profile, including material debt-financed acquisitions or a material change in its dividend policy."
Shares in RPC closed up 0.3% Friday at 764.98 pence each.
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