Research Update: Kleopatra Holdings 1 S.C.A. Downgraded To 'B-' On Weaker-Than-Expected Operating Performance; Outlook Stable

Kleopatra Holdings 1 S.C.A. (KP), the ultimate holding company (holdco) of German packaging manufacturer Kloeckner Pentaplast, underperformed our EBITDA expectations in 2018. Our revised revenue and EBITDA forecasts result in weaker credit metrics for year-end 2019. We now expect S&P Global Ratings-adjusted EBITDA interest coverage to be around 1.6x and adjusted debt to EBITDA around 9x. These are below our previous expectations of 2x and 8x, respectively. We are therefore lowering our long-term issuer credit rating on KP to 'B-' from 'B'. We are also lowering the issue rating on the senior secured facilities to 'B-' from 'B' and on the holdco notes to 'CCC' from 'CCC+'. The stable outlook reflects our expectation that EBITDA interest coverage will exceed 1.5x

...+ Kleopatra Holdings 1 S.C.A. (KP), the ultimate holding company (holdco) of German packaging manufacturer Kloeckner Pentaplast, underperformed our EBITDA expectations in 2018. + Our revised revenue and EBITDA forecasts result in weaker credit metrics for year-end 2019. We now expect S&P Global Ratings-adjusted EBITDA interest coverage to be around 1.6x and adjusted debt to EBITDA around 9x. These are below our previous expectations of 2x and 8x, respectively. + We are therefore lowering our long-term issuer credit rating on KP to 'B-' from 'B'. We are also lowering the issue rating on the senior secured facilities to 'B-' from 'B' and on the holdco notes to '###' from '###+'. + The stable outlook reflects our expectation that EBITDA interest coverage will exceed 1.5x and that liquidity will remain adequate over the next 12 months....

Research Update