S&P cuts Albea notes to B, rates notes CCC+

Standard & Poor's said it lowered its long-term corporate credit rating on Albea Beauty Holdings SA to B from B+.

At the same time, the agency assigned its B long-term corporate credit rating to Albea Beauty Partners SA, a new holding company in Albea's group structure.

The outlooks are stable.

S&P also lowered its issue rating on Albea's €200 million senior secured notes due 2019 and $385 million senior secured notes due 2019 to B from B+. The recovery rating on these notes remains unchanged at 4, indicating an expectation of average (30%-50%) recovery in the event of a payment default.

In addition, the agency assigned its CCC+ issue rating to the proposed $150 million payment-in-kind toggle notes due 2018, to be issued by Albea Beauty Partners. The recovery rating on these notes is 6, indicating an expectation of negligible (0%-10%) recovery in the event of a payment default.

The rating on Albea Beauty Partners reflects that on its indirectly fully owned subsidiary Albea.

S&P said the downgrade of Albea follows the company's announcement that it will issue $150 million of PIK toggle notes to fund a dividend payout to its private equity owners Sun Capital Inc. and Albea's own management. The rating agency believes this aggressive transaction will negatively affect Albea's credit quality, and therefore revised its assessment of Albea's financial policy to "very aggressive" from "aggressive."

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