TEXT-S&P puts all BWAY ratings on watch developing

Overview

-- An affiliate of Platinum Equity has entered into a definitive agreement to acquire BWAY Parent Co. Inc. in a transaction valued at approximately $1.24 billion.

-- We placed all ratings, including the 'B' corporate credit rating, on CreditWatch with developing implications.

-- To resolve the CreditWatch, we plan to assess the impact of the acquisition on Atlanta-based BWAY Holding Co.'s financial profile to resolve the CreditWatch. Developing implications means that we could raise, lower, or affirm the ratings.

Rating Action On Oct. 5, 2012, Standard & Poor's Ratings Services placed its ratings, including its 'B' corporate credit rating, on BWAY Parent Co. Inc., BWAY Holding Co., and all rated subsidiaries (BWAY) on CreditWatch with developing implications.

Rationale

The CreditWatch placement follows BWAY's acquisition announcement. An affiliate of Platinum Equity will acquire the company in a transaction valued at approximately $1.24 billion. The company expects the transaction, which is subject to customary closing conditions, to close in the fourth quarter of 2012.

The transaction will be financed through a combination of equity contributed by Platinum Equity and debt financing provided by Bank of America Merrill Lynch and Deutsche Bank. We expect that BWAY Holding Company's existing 10% senior notes due 2018 will stay in place after the transaction and that the company's existing senior PIK toggle notes due November 2015 will be refinanced through the company's new debt financing. Other details regarding the proposed financing are not yet available.

BWAY, with annual sales of about $1.2 billion, mainly produces plastic containers and general-line metal containers for packaging paints, solvents, and household products in the U.S. market. It's also North America's third-largest producer of aerosol cans, which represent about 12% of the company's sales.

The rating on BWAY reflects our expectation of highly leveraged financial measures, which include total adjusted debt-to-EBITDA of about 5.6x as of June 30, 2012. It also reflects the company's very aggressive financial policies, exposure to volatile resin costs, and key industry risks, such as weak demand in the housing and industrial end markets. The company's good profitability and cash flow, market share gains from recent acquisitions, benefits from plant rationalization, favorably structured contracts, and cost-reduction efforts partly offset these weaknesses. We characterize BWAY's business risk profile as "fair" and its current financial risk profile as "highly leveraged".

CreditWatch

We will monitor developments associated with the pending transaction and plan to resolve the CreditWatch listing upon review of the company's financing plans and expected financial profile following the transaction. The CreditWatch placement indicates that we could raise, lower, or affirm the ratings depending on our review of the transaction and implications for credit quality.

Related Criteria And Research

-- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011

-- Methodology and Assumptions: Standard & Poor's Standardizes Liquidity Descriptors For Global Corporate Issuers, July 2, 2010

-- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012

-- Key Credit Factors: Methodology And Assumptions On Risks In The Packaging Industry, Dec. 4, 2008

-- U.S. Packaging Companies' Debt Is Rising, But Refinancing Risk Is Still Manageable, June 26, 2012

-- Industry Economic And Ratings Outlook: U.S. Packaging Companies Will Likely Remain Stable During A Slow Economic Recovery, July 19, 2012

Ratings List CreditWatch Action To From BWAY Holding Co. BWAY Parent Co. Inc. BWAY Corp. Corporate credit rating B/Watch Dev/-- B/Stable/-- BWAY Holding Co. Senior secured B/Watch Dev B Recovery rating 3 3 Senior unsecured CCC+/Watch Dev CCC+ Recovery rating 6 6 BWAY Parent Co. Inc. Junior subordinated CCC+/Watch Dev CCC+ Recovery rating 6 6

ICL Industrial Containers ULC

Senior secured B/Watch Dev B Recovery rating 3 3

Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at

. All ratings affected by this rating action can be found on Standard & Poor's public Web site at . Use the Ratings search box located in the left column. (New York Ratings Team)

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