Moody's Investors Service - the rating unit of
(MCO) - assigned Baa1 ratings to the proposed senior secured
credit facilities and senior secured term loans of Crown Americas
LLC, Crown European Holdings S.A. and Crown Metal Packaging
Canada L.P. All three are units of
Crown Holdings Inc.
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Moody's also confirmed Crown's Ba1 corporate family rating (CFR).
The rating is attributable to the company's strong free cash
generation and commitment to reduce the amount of debt.
In addition, Crown's probability of default (PDR) rating has been
confirmed at Ba1-PD. Speculative grade liquidity (SGL) rating was
affirmed at SGL-2. Moody's gave Crown a stable ratings outlook.
These ratings came on the back of improved leverage. Pro forma
leverage ratio rose to 5.3 times as of Sep 30, 2013, but is
expected to decline to around 4.8 times by year-end as Crown's
peak working capital season winds down and it repays debt with
its strong free cash flow.
On Oct 31, 2013, Crown entered into an agreement to acquire
Mivisa Envases, S.A.U., a Spanish food-can producer for €1.2
billion (around $1.65 billion) to expand into the Iberian
Peninsula and Morocco markets. The acquisition, which is subject
to review by the European Commission and other authorities, is
expected to close during 2014.
Moody's ratings confirmation also reflects the benefits of the
acquisition which includes projected synergies of $34 million by
2016 and the advantages from Mivisa's newer facilities and
However, the rating agency is apprehensive about changes in the
amount of outstanding unsecured debt. Moody's also stated that
the ratings could be downgraded if the earnings before interest,
tax, depreciation and amortization (EBIT) interest coverage stays
below 3.7 times, leverage remains above 3.8 times and free cash
flow to debt continues below 8.5%.
Crown, which belongs to the containers and packaging industry
EveryWare Global, Inc.
), reported third-quarter 2013 adjusted earnings of $1.13 per
share, up 13% year over year, on strong sales. Gross margin
expanded 50 basis points (bps) to 16.5% in the quarter.
Additionally, operating margin increased 50 bps to 12.5%.
Crown aims to expand the beverage cans volume worldwide,
especially in the growth markets. In addition, management remains
optimistic about performance, based on a balanced product
portfolio and availability of high quality metal packaging. These
will drive future unit volume, free cash flow and profit growth.
Philadelphia-based Crown is a leading supplier of packaging
products to consumer marketing companies. The company
manufactures aluminum beverage cans, food cans, aerosol cans and
other packaging products.
Crown Holdings currently retains a Zacks Rank #3 (Hold).