S&P assigns CCC+ to Albea Beauty notes

S&P said it affirmed its B long-term corporate credit rating on Albea Beauty Holdings SA.

At the same time, S&P assigned a B long-term corporate credit rating to Albea's newly established holding ompany Hercule Debtco Sarl. The outlook on Albea and Hercule Debtco is stable.

S&P said it is also assigning a CCC+ issue rating to the proposed €150 million pay-if-you-can notes due in 2024, to be issued by Hercule Debtco. The issue rating is two notches below the corporate credit rating on Albea, reflecting a recovery rating of 6 and S&P’s expectation of negligible recovery (0%-10%; rounded estimate: 0%) for the holders of the new subordinated PIYC notes in the event of a payment default.

Finally, S&P said it is affirming the B issue rating on the existing term B loan ($408 million and €385 million) issued by Albea, in line with the corporate credit rating. The 4 recovery rating remains unchanged, reflecting an expectation of average (30%-50%; rounded estimate: 40%) recovery in the event of a payment default.

The affirmation follows Albea's announcement that PAI Partners has agreed to buy Albea from former owner Sun Capital Inc. for about $1.5 billion, S&P said in a news release.

“We view the transaction as aggressive as it leads to a further increase in leverage at Albea less than a year after it upsized its debt in April 2017 and paid a debt-financed dividend to its former shareholder. However, we believe that the company has some capacity to carry the additional debt,” S&P said in the news release.

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