Moody's upgrades Refresco Gerber

Moody's Investors Service said it upgraded Refresco Gerber BV’s corporate family rating to Ba3 from B2, its probability of default rating to Ba3-PD from B2-PD and the rating on the senior secured notes to be redeemed on June 1 to B1 from B3. The outlook is stable.

The rating action concludes Moody's review of Refresco Gerber's capital structure after completion of the Amsterdam initial public offering, with about 48% of the capital now in public ownership. Together with a new bank loan of €522 million and €71 million of cash on the balance sheet, net IPO proceeds of €91 million will be used to redeem existing floating- and fixed-rate notes. Pro forma for the IPO and the refinancing, Refresco Gerber's adjusted gross leverage ratio as of Dec. 31 improved to 3.2 times from 3.8 times.

The agency said the Ba3 corporate family rating also reflects the company's solid position as a leading European producer of private-label beverages, relatively strong product diversity and good geographic diversity, recent improvement in profitability mainly driven by merger synergies and good liquidity profile.

However, Moody's noted that the rating remains constrained by the company's weak underlying volume growth, exposure to volatile commodity prices and price competition from branded competitors and high customer concentration, albeit declining.

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