Moody's rates Exopack notes B2

Moody's Investors Service said it assigned a B2 corporate family rating and a SGL-3 speculative grade liquidity rating to Exopack Holding Corp. and a B2 rating to its $235 million senior unsecured notes due 2014.

The outlook is stable.

On Oct. 13, an affiliate of Sun Capital Partners Group Inc. acquired Exopack LLC for $245.8 million. Subsequent to the acquisition, Exopack LLC was merged with Cello-Foil Holding Corp., an existing portfolio company of Sun Capital. The combined entity, Exopack Holding Corp., will be capitalized with $235 million of debt and contributed equity of $75 million from Sun Capital.

The B2 ratings reflect the company's modest scale, its lack of diversification and a high degree of fragmentation in the flexible packaging industry, all of which may limit the company's ability to improve operating margins. Consequently, financial leverage may remain at current levels longer than the near term and should margin improvement occur, Moody's predicted that Exopack will consider debt-financed acquisitions to fund external growth.

Exopack's ratings are supported by a relevant market position in the flexible packaging industry, relative margin stability, a number of long-term customer relationships and adequate liquidity, the agency said.

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