S&P: Mondi outlook stable

Standard & Poor's said it revised to stable from positive the outlook on Mondi Group and affirmed its BBB- long-term corporate credit rating.

The outlook revision follows Mondi's agreement to acquire Nordenia International AG in debt-funded deal, according to the agency.

Mondi's credit metrics will weaken as a result, with negative discretionary cash flow generation in 2012, the agency said.

Mondi will pay €240 million for over 93% of Nordenia, which it will fund with a new €250 million bridge loan. In addition, Mondi will take on €398 million of Nordenia's debt, including Nordenia's €280 million senior unsecured notes due 2017, revolving credit facility debt, trade receivables factoring facilities and pension liabilities.

Nordenia has been majority controlled by Oaktree Capital Management LP (A-/stable/A-2) since 2006, the agency said.

The agency said it assumes further weakening in Mondi's operating environment in the second half of 2012, due to renewed macroeconomic constraints.

Pro forma adjusted debt-to-EBITDA ratio is forecast to be about 2.3x by Dec. 31, a significant jump from a low of 1.4x in 2011, S&P said.

The consolidated Mondi group's business risk profile will be somewhat strengthened following the Nordenia acquisition, the agency added.

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