S&P gives Ring Container loans B

S&P said it gave B issue and 3 recovery ratings to Ring Container Technologies Group LLC’s planned $770 million first-lien term loan and $50 million revolving credit facility. The 3 recovery rating indicates an expectation for meaningful recovery (50%-70%; rounded estimate: 50%).

Concurrently, the agency upgraded Ring’s issuer rating to B from B-. “The upgrade reflects our expectation of improving operating trends over the next few years. We project Ring's adjusted EBITDA margins will remain at 26%-28% over the next few years following an improvement to 28.1% in fiscal 2020 (ending Dec. 31, 2020), and average annual free operating cash flow (FOCF) of $60 million for fiscal 2021 and 2022,” S&P said in a press release.

The new loans are expected to refinance senior secured credit facilities and fund a $303 million dividend.

“This will result in higher debt leverage, with debt to EBITDA increasing to about 6x (from approximately 4x at June 30, 2021) following the transaction close. But the higher leverage is consistent with our expectations for the current ratings given the company's better-than-expected operating performance,” the agency said.

The outlook is stable.

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