S&P rates Fiber Bidco/Fedrigoni notes B

S&P said it assigned a preliminary B long-term issuer credit rating to Fiber Bidco SpA (Fedrigoni) and assigned a preliminary B issue rating and 3 recovery rating to a proposed €875 million senior secured notes due 2027.

The outlook is stable.

Fiber Bidco is an Italy-based premium and specialty paper and label manufacturer. The group plans to raise €875 million senior secured notes due 2027, a €150 million senior secured term loan A, as well as a €150 million revolving credit facility, which will be undrawn at closing.

The proceeds from the debt issuance (€1.025 billion), the €584 million equity provided by BC Partners, and a €308 million vendor loan by Bain and minority shareholders will fund the leveraged buyout by Bain Capital and BC Partners, the repayment of existing debt (€432 million), transaction fees (€130 million), and the acquisition of Unifol (€21 million). Leases and other debt totaling €106 million will be rolled over.

“The stable outlook indicates our expectation of S&P Global Ratings-adjusted debt to EBITDA of about 6.5x-7.0x and negative adjusted free operating cash flow (FOCF) of about €40 million in 2022. It also reflects our expectation of improved cash generation from 2023, as working capital movements normalize,” S&P said in a news release.

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