Research Update: ProAmpac PG Intermediate LLC Ratings Affirmed On $225 Million First-Lien Term Loan Add-On, Outlook Remains Negative

Cincinnati-based ProAmpac PG Intermediate LLC plans to issue a $225 million incremental add-on to its existing first-lien term loan. The company plans to use the proceeds from the add-on to fund two bolt-on acquisitions of flexible packaging manufacturers and pay related fees and expenses. As part of the transaction, the company is also upsizing its revolving credit facility by $50 million. We believe that, despite the company's very high debt leverage (exacerbated by the multiple acquisitions it has completed this year), ProAmpac has a viable path to reduce its adjusted debt-to-EBITDA to around 7.0x over the next 12 months (with further reduction in 2019). Therefore, we are affirming all of our ratings on ProAmpac PG Intermediate LLC. The negative outlook

...+ Cincinnati-based ProAmpac PG Intermediate LLC plans to issue a $225 million incremental add-on to its existing first-lien term loan. The company plans to use the proceeds from the add-on to fund two bolt-on acquisitions of flexible packaging manufacturers and pay related fees and expenses. As part of the transaction, the company is also upsizing its revolving credit facility by $50 million. + We believe that, despite the company's very high debt leverage (exacerbated by the multiple acquisitions it has completed this year), ProAmpac has a viable path to reduce its adjusted debt-to-EBITDA to around 7.0x over the next 12 months (with further reduction in 2019). + Therefore, we are affirming all of our ratings on ProAmpac PG Intermediate LLC. + The negative outlook reflects ProAmpac's limited leeway for underperformance or additional debt-funded acquisitions at the current rating because any setbacks could hinder its debt reduction....

Research Update