S&P gives Intelligent Packaging notes CCC

S&P said it assigned a CCC rating with a 6 recovery rating (0%-10%; rounded estimate: 0%) to Intelligent Packaging Sub LP’s proposed $125 million contingent cash-pay notes to fund a shareholder distribution.

The agency also downgraded Intelligent Packaging’s issuer rating and senior secured notes to B- from B. Our 4 recovery rating (30%-50%; rounded estimate: 45%) on the notes remains unchanged.

“The downgrade reflects IPL’s weaker credit metrics, with debt leverage of over 7x, and aggressive financial policies under its new financial sponsor. We estimate that the $125 million holding company notes will increase the company’s leverage by more than a turn to over 7x on a pro forma basis. This is well above our 6.5x downgrade threshold and we do not expect IPL to materially improve its leverage over the next 12 months,” S&P said in a press release.

The outlook is stable.

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