Following the announcement of an increase in the 4% senior secured notes due 2022 to €650 million (around $885 million) by Crown Holdings, Inc. ( CCK ) on Jun 26, Moody's Investors Service - the rating unit of Moody's Corporation ( MCO ) declared no immediate impact on Crown's Ba1 corporate family rating, stable outlook, and other instrument ratings.
Shares of Crown Holdings rose around 1% since 26th June and closed at $50 at the end of the trading session on Jul 1.
Crown Holdings had increased the size of its private placement from €500 million to the current €650 million. The proceeds from the notes, to be issued by Crown European Holdings S.A., a subsidiary of Crown Holdings, will be used to pay fees and expenses related to the offering of New Notes and to pay redemption and tender premiums associated with the repayment of the 2018 Notes.
In addition, the proceeds will be deployed to retire €500 million senior unsecured notes due 2018. Crown Holdings will also use it for general corporate purposes including acquisitions, the permanent repayment of term loan and the repurchase of outstanding senior unsecured notes.
Moody's previously assigned a Ba1 rating to the senior unsecured notes. Crown Holdings' Ba1 corporate family, Ba1-PD probability of default ratings and other ratings remain unchanged. The Ba1 corporate family rating depicts the company's position in an oligopolistic industry, comparatively stable end markets and improved margins.
Moody's also stated that Crown Holdings is expected to benefit from the recent Mivisa acquisition. The ratings outlook is stable which hints that Crown will deploy sufficient free cash flow for debt reduction to improve its credit metrics to a level commensurate with the rating category over the intermediate term.
For the second quarter of 2014, Crown Holdings expects earnings per share between 90 cents and $1.00, excluding any impact from the Mivisa acquisition. Including the impact of Mivisa acquisition and excluding the impact of share repurchases, full-year earnings per share are expected to exceed the previous guidance of $3.15 to $3.35.
Philadelphia-based Crown Holdings 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 holds a Zacks Rank #2 (Buy). Some other stocks worth considering in the same sector include Ball Corp. ( BLL ) and Graphic Packaging Holding Co. ( GPK ). Both carry the same rank as Crown Holdings.
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