S&P gives RLG B-, loans B-, CCC

S&P said it gave B- ratings to RLG Holdings LLC and its planned senior secured first-lien credit facilities, which includes a $60 million revolving credit facility due 2026, a $405 million term loan due 2028 and a $90 million delayed-draw term loan due 2028. The agency also assigned a CCC issue-level rating to RLG’s proposed senior secured second-lien credit facilities, which include a $110 million term loan due 2029 and a $15 million delayed-draw term loan due 2029.

“Our B- issuer credit rating on RLG reflects the company's very small operating scale in the packaged goods label industry and a highly leveraged capital structure. At less than $400 million of annual sales, RLG is one of the smaller packaging companies we rate,” the agency said in a press release.

Ares Management will use the loans to acquire the company. The borrowings will push up RLG’s adjusted debt balance by 88% to more than $540 million from $289 million the year before, which is a heavy burden for a small company to carry, S&P noted.

The outlook is stable. The outlook reflects the view that RLG will continue benefiting from good demand for its labels and maintain operating profitability and liquidity such that its credit measures are appropriate for the ratings, with an adjusted debt to EBITDA ratio that decreases toward roughly 7.5x by the end of this year, the agency said.

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