S&P rates Reynolds Group notes B-

Standard & Poor's said it assigned a B- debt rating to the proposed $1 billion senior unsecured notes due 2018 to be issued by Reynolds Group Issuer (Lux) SA, a subsidiary holding entity of Reynolds Group Holdings Ltd. A recovery rating of 6 was assigned to this debt, indicating an expectation of 0% to 10% recovery for creditors in the event of a default.

The company intends to use the proceeds of the proposed notes to partially fund the acquisition of Evergreen Packaging Inc. and Whakatane Paper Mill. The company also plans to raise an additional $800 million of incremental term loan through an amendment to its existing senior secured facilities, the agency said.

The ratings takes into account the fairly comprehensive security and guarantee package, S&P said.

However, the multijurisdictional nature of Reynolds, security sharing arrangements and a complex structure could complicate any insolvency and enforcement proceedings, the agency said.

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