Moody’s downgrades Multi-Color

Moody's Investors Service said it downgraded the corporate family rating of Multi-Color Corp. to B3 from Ba3 and probability of default rating to B3-PD from Ba3-PD and confirmed all of its existing instrument ratings.

The downgrades conclude a review that began in February following news that Platinum Equity LLC agreed to acquire Multi-Color through a merger with its portfolio company, W/S Packaging Holdings, Inc., for $2.5 billion, including the assumption of $1.5 billion of debt, Moody’s explained.

The transaction is expected to close in the third quarter.

Platinum Equity is currently in the process of raising financing, which will be used to acquire Multi-Color and repay existing debt at both Multi-Color and W/S Packaging Holdings, the agency said.

Once the existing Multi-Color debt is repaid, Moody’s said it will withdraw instrument ratings as well as the corporate family rating and probability of default rating.

The outlook is stable.

The ratings reflect the company’s weak credit metrics, recent underperformance by Multi-Color and integration risk related to the transformational acquisition, the agency said.

The combined company will have a strong business profile due its large scale as measured by revenues and due to broad geographic, product and operational diversity, Moody’s said.

Strengths in the company's credit profile include high exposure to predominantly stable end markets and long term customer relationships, the agency said.

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