ACCO within reach of targeted leverage range after being over-levered

By Devika Patel

Knoxville, Tenn., March 29 – ACCO Brands Corp. is near its targeted debt to EBITDA range of 2x to 2.5x, with a leverage ratio of 2.6x as of the end of 2017.

The company was “fairly over-levered” following its spin-off from Fortune Brands and the subsequent recession but now expects to be able to “de-lever pretty quickly.”

“We had a fairly complicated history as a public company,” chairman, president and chief executive officer Boris Elisman said at Sidoti & Co.’s spring 2018 conference in New York on Thursday.

“We were spun off from Fortune Brands in 2005 with $1 billion of going-away debt and then we entered into the Great Recession, so the company was fairly over-levered for a period of time.

“Over the last many years, we were able to improve that and our debt to EBITDA ratio was 2.6 at the end of 2017 and that was despite the fact that we borrowed over $300 million to do the Esselte acquisition.

“The company generates a significant amount of cash and we can de-lever pretty quickly.

“The right range for us is 2x to 2.5x, so you can see that we’re almost there,” he said.

On Oct. 24, 2016, ACCO said it would acquire Esselte Group Holdings AB from private equity firm J.W. Childs for $333 million in cash.

The transaction was funded with cash and euro-denominated bank debt. As part of the financing, the company also refinanced its senior-secured credit facilities.

The acquisition closed on Feb. 1, 2017.

ACCO Brands is a Lake Zurich, Ill.-based office supply manufacturer.

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