S&P: Silgan on watch, Graham on positive watch

Standard & Poor's said the ratings on Silgan Holdings Inc. were placed on CreditWatch with negative implications following Silgan's announcement that it has entered into a definitive merger agreement to acquire Graham Packaging Co. Inc. for $4.5 billion.

S&P also placed its corporate credit and debt issue ratings on Graham on CreditWatch with positive implications.

Upon completion of the Graham Packaging acquisition, which is subject to shareholder and regulatory approvals and expected to occur in the third quarter of 2011, S&P expects to lower the ratings on Silgan to BB/stable from BB+, the agency said.

This ratings expectation is based on the assumption that operating results will remain generally stable this year and that Silgan will raise permanent financing for the acquisition prior to closing, the agency added.

The expected downgrade to BB, if the deal closes as proposed, would reflect the increase in debt incurred in connection with the acquisition, S&P said. The rating balances Silgan's satisfactory business risk profile with its aggressive financial risk profile.

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