Moody’s might cut Refresco

Moody's Investors Service said it placed all ratings of Refresco Group NV under review for downgrade, including the corporate family rating of Ba3 and probability of default rating of Ba3-PD.

The action follows Refresco's July 25 announcement that it will acquire Cott Corp.’s (B2, under review for upgrade) bottling activities for total considerations of $1.25 billion.

The acquisition will enhance Refresco's business profile and offer synergies opportunities. The transaction will initially be debt-funded, increasing the Moody's-adjusted debt/EBITDA to about 5.2 times pro-forma from 3.4 times on a stand-alone basis (based on full-year 2016 accounts).

The review is expected to be completed in the near-term. The range of outcomes may include a downgrade of Refresco's ratings but Moody's said it does not expect any downgrade to be more than one notch.

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