Moody’s gives Refresco facilities Ba3

Moody's Investors Service said it confirmed the Ba3 corporate family rating and the Ba3-PD probability of default rating of Refresco Group NV.

The agency also assigned Ba3 ratings to Refresco's new senior secured facilities, which include a €200 million revolving credit facility due 2023, a €1.3 billion term loan due 2024 and a $620 million term loan due 2024. Proceeds from the new debt will be used to fund the acquisition of Cott Corp.'s (B2 review for upgrade) bottling activities as well as refinance existing debt.

The outlook is negative.

The confirmation of Refresco's Ba3 corporate family rating with a negative outlook reflects the high Moody's-adjusted debt/EBITDA of 5.2x at closing of the acquisition (based on full-year 2016 accounts). Moody's said it will consider stabilizing the outlook if the Moody's-adjusted debt/EBITDA reduces below 4.5x on a sustained basis, supported by the envisaged new equity raise and merger synergies.

The agency said it views the Ba3 corporate family rating as weakly positioned given the increase in the Moody's-adjusted debt/EBITDA to roughly 5.2x pro-forma for the debt-funded acquisition from 3.4x on a stand-alone basis.

The negative outlook reflects the high Moody's-adjusted debt/EBITDA of 5.2x at closing of the acquisition. Moody's said it will consider stabilizing the outlook if the Moody's-adjusted debt/EBITDA reduces below 4.5x on a sustained basis, driven by the planned new equity raise and merger synergies.

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