Moody’s rates Reynolds Group loans B1

Moody's Investors Service said it assigned B1 ratings to the proposed $1,973,000,000 senior secured term loan due 2023, €250 million senior secured term loan due 2023 and $400 million senior secured revolving credit facility due 2021 of Reynolds Group Holdings Inc., a subsidiary of Reynolds Group Holdings Ltd.

The company's B3 corporate family rating, B3-PD probability of default rating and other instrument ratings of Reynolds Group Holdings Ltd. and its subsidiaries were unchanged.

The rating outlook is positive.

Proceeds from the new loans, along with $23 million of cash from the balance sheet, will be used to refinance about $2.5 billion of debt as well as pay fees and expenses related to the transaction.

Moody’s said the B1 ratings on the credit facilities reflect the seniority of the debt as well as the projected benefits of the proposed debt paydown and an expectation that the company will significantly reduce debt further over the next 12 to 18 months while maintaining good liquidity.

The proposed debt reduction is expected to significantly improve free cash flow in 2017 and all free cash flow is expected to be directed toward debt reduction, the agency said.

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