S&P: Ardagh cut to negative, PIK notes rated B+

Standard & Poor's said it revised its outlook on Ardagh Glass Ltd. to negative from stable following the group's issue of additional debt in the form of pay-in-kind (PIK) notes.

At the same time, S&P assigned its BB long-term corporate credit rating to the group's newly formed holding company, Canoa plc, which will change its name to Ardagh Glass Group plc. The outlook is negative.

In addition, S&P assigned its B+ long-term rating to Ardagh's proposed €125 million of senior PIK notes. All other ratings were affirmed, including the BB corporate credit rating on Ardagh Glass Ltd.

S&P said the outlook revision primarily reflects that although no short-term cash flow impact is expected from the proposed PIK notes, the notes still represent additional debt that might need to be refinanced in the future.

Ardagh will use the proceeds of the proposed PIK transaction to fund its growth strategy as well as to fund the buyout of minorities.

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