Moody's rates Reynolds loans Ba3

Moody's Investors Service said it confirmed the B2 corporate family rating of Reynolds Group Holdings Ltd. and assigned provisional ratings for the financing of the announced acquisition of Pactiv Corp.

The proposed $1.5 billion senior secured term loans of five- and six-years and $2 billion eight-year senior secured notes have been assigned a provisional Ba3 rating. The proposed eight-year senior unsecured notes of $1.5 billion have been assigned a provisional Caa1 rating. The B1 ratings on its existing senior secured debt have been placed under review for possible upgrade. The ratings on the company's existing unsecured debt remain unchanged.

The outlook has been changed to negative.

The ratings assume a successful placement of the proposed additional bank debt, which provides the company with a relatively well-balanced debt maturity profile, Moody's said.

The ratings reflects the positive impact of the acquisition on its business profile, given Pactiv's broad product portfolio with a significant concentration in food packaging, which historically allowed for fairly stable revenues and above industry profit margins, the agency said.

Moreover, the increased scale and further diversification also is seen as accretive to the company's business profile, Moody's said.

But the acquisition also results in an increased pro forma debt-to-EBITDA leverage ratio of about 6.8x, the agency said.

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