Moody’s upgrades Innovia

Moody's Investors Service said it upgraded the corporate family rating of Innovia Group (Holding 3) Ltd. to B1 from B2 and probability of default rating to B1-PD from B2-PD.

The agency also said it affirmed the B2 rating of the senior secured floating-rate notes issued by Innovia Group (Finance) plc.

The outlook is stable.

The upgrades follow the company’s improving operating margins and cash flow generation following the recent disposal of its lower-margin and capital expense-intensive Cellophane division, Moody’s said.

The proceeds from the sale together with €5 million of cash will be used to prepay about €80 million of the company's floating-rate notes, resulting in a reduction in leverage of about 0.7x, the agency said.

Free cash flow also will improve following the completion of a number of major investment projects undertaken to meet the demands of new contract wins and to generate material energy cost savings, Moody’s said.

Underlying operating performance has been favorable over the last 18 months and this trend is expected to continue through 2017, the agency added.

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