Research Update: Taghleef Industries Holdco Outlook Revised To Stable From Positive On Proposed Acquisition; 'BB-' Ratings Affirmed

Dubai-based Taghleef Industries Holdco Ltd. (Taghleef) recently announced the acquisition of Colombia-based bi-axially oriented polypropylene (BOPP) films producer, Biofilm, for $160 million. This acquisition will be funded with a combination of cash on balance sheet and new debt. Following the transaction, Taghleef's credit metrics are unlikely to meet our threshold for a higher rating over the next 12 months. We now expect funds from operations (FFO) to debt of 24% in 2018 and just under 30% in 2019. Both are below our previous expectations of over 30% and 34%, respectively. We are therefore revising our outlook on Taghleef to stable from positive and affirming our 'BB-' issuer credit rating. The stable outlook reflects our expectation that the company's pro forma

...+ Dubai-based Taghleef Industries Holdco Ltd. (Taghleef) recently announced the acquisition of Colombia-based bi-axially oriented polypropylene (BOPP) films producer, Biofilm, for $160 million. This acquisition will be funded with a combination of cash on balance sheet and new debt. + Following the transaction, Taghleef's credit metrics are unlikely to meet our threshold for a higher rating over the next 12 months. We now expect funds from operations (FFO) to debt of 24% in 2018 and just under 30% in 2019. Both are below our previous expectations of over 30% and 34%, respectively. + We are therefore revising our outlook on Taghleef to stable from positive and affirming our '##-' issuer credit rating. + The stable outlook reflects our expectation that the company's pro forma FFO to debt will exceed 20% in 2018 and it will only generate limited free operating cash flow....

Research Update