S&P rates Exopack loan B, notes CCC+

Standard & Poor's said it affirmed the B corporate credit rating on Exopack Holding Corp. and assigned a B rating and a 3 recovery rating to the company's proposed $400 million term loan B facility due 2017. The 3 recovery rating indicates 50% to 70% recovery in a default.

The agency also said it assigned a CCC+ rating and a 6 recovery rating to the company's proposed $225 million of senior unsecured notes due 2018. The 6 recovery rating indicates 0% to 10% expected recovery in a default.

The outlook remains stable.

The proceeds will be used to pay a $191 million dividend to its shareholders, repay $396 million in existing debt and fund transaction fees and expenses with the remainder, the agency said.

S&P said it expects the new $75 million asset-based revolving credit facility to be undrawn at the close of the transaction.

The ratings reflect the company's weak business risk profile stemming from its position in a highly competitive and fragmented market, improving contribution from value-added products in its portfolio and aggressive financial policies and highly leveraged financial profile, S&P said.

A key supporting factor is its improved financial performance and profitability following its 2010 acquisition of Alcan's cheese and meat business, which provided synergies and led to higher margins, the agency said.

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