S&P affirms Reynolds

Standard & Poor's said it affirmed the B+ corporate credit rating on Reynolds Group Holdings Ltd. and removed it from CreditWatch.

The CreditWatch with negative implications began in June after Reynolds announced that plans to acquire Graham Packaging Co. Inc.

The outlook is negative.

The affirmation reflects the company's strong business risk profile as a premier provider of food and beverage packaging, S&P said.

The acquisition of Graham adds a leading maker of innovative rigid plastic packaging with high and relatively stable operating profitability, the agency said.

Although this transaction comes closely on the heels of the large, mostly debt-financed acquisition of Pactiv Corp. in November 2010 and results in a slight increase in Reynolds' already high debt leverage, S&P said it believes Reynolds should be able to obtain about $400 million of targeted synergies and other cost reductions.

Nevertheless, given its high debt leverage, Reynolds is vulnerable to raw material cost swings, particularly in aluminum and plastic resin, the agency added.

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