Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CEO Issue
    • Diversity
    • Best Places to Work
      • 2022 winners
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
      • 2022 class
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
December 01, 2011 01:00 AM

Credit downgraded, Kl"ckner evaluates balance sheet

Michael Lauzon
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    GORDONSVILLE, VA. (Dec. 1, 2:45 p.m. ET) — Kl"ckner Pentaplast Group's owner is evaluating whether to realign KP's balance sheet “in a precautionary and responsible manner,” a spokeswoman stated.

    Credit rating agency Standard & Poor's recently downgraded the long-term corporate credit rating of KP from CCC+ to CCC-. New York equity firm Blackstone Group LP bought KP in 2007 for $1.8 billion.

    The credit downgrade was directly made for KP's holding company Kleopatra Lux 1 Sarl of Luxembourg.

    “KP is currently meeting its financial obligations,” noted KP spokeswoman Nancy Ryan in an e-mail correspondence. “No covenant breach occurred from 2007 through September 2011 despite challenging economic times. The truth is: covenants remain tight. The key parties are aware of this challenge and are discussing certain scenarios for a financial realignment in a responsible manner.”

    “The measures considered now are completely independent from our solid operational performance and do not affect our daily business,” Ryan added.

    KP is a major films producer for pharmaceutical, medical, food, electronics, thermoforming, printing and specialties. Its annual sales exceed $1.4 billion and the Montabaur, Germany-based group employs more than 3,000 globally. Among its subsidiaries is Klockner Pentaplast of America Inc. in Gordonsville, Va., where Ryan is based. Processes employed include calendering, extrusion, coating, laminating, orienting, printing and converting.

    In a Nov. 23 report, Standard & Poor's analysts said Kleopatra Lux, aka Klockner Pentaplast, will breach its financial covenants because of its weaker-than-expected performance in the financial year to Sept. 30, 2011, and because of tightening covenant test levels. Foreign currency volatility has added more pressure on the company.

    “Klockner Pentaplast has a highly leveraged capital structure, which we view as unsustainable,” the report stated. The credit downgrade highlights the risk of a covenant breach and of a debt restructuring in the near term.

    EBITDA headroom on the quarterly debt leverage covenant test date as of Sept. 30 was only 0.6 percent, and covenant test levels continue to tighten each quarter, according to S&P.

    “Klockner Pentaplast runs a strong and stable business; has a strong liquidity position with plenty of cash on the balance sheet; and solid operational performance,” Ryan countered. “In fact, our sales and operational profitability increased more than 5 percent year-over-year within a challenging economic environment. The KP Group is well positioned within its key international markets. KP is currently meeting its financial obligations.”

    S&P stated KP faces significant exposure to volatile input prices. The company had total adjusted debt of about 1.5 billion euros (including preferred equity certificates) as of Sept. 30. S&P thinks KP's debt-to-EBITDA ratio will likely remain about 10 times over the near term.

    “We consider these weaknesses to be partly offset by Klockner Pentaplast's niche leading market positions in Europe and North America for polyvinylchloride-based and PET-based rigid film” S&P admitted. “The group also has broad geographic diversity and a diverse customer base.”

    S&P said it could consider taking a positive rating action if KP were to restore an adequate cushion of about 15 percent to 30 percent headroom under its financial covenants. Improved free cash flow generation could accelerate a positive move.

    “Appropriate measures to manage changes in the economic environment were accounted for when KP was acquired in 2007,” Ryan explained. “Realigning financial structure is a common measure for many companies and a chance to further strengthen KP's foundation. Our stakeholders have fundamental interest in KP's economic success.”

    RECOMMENDED FOR YOU
    Unsupervised worker blamed for overriding alarms in Michigan chemical spill
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    ā€˜Crazy' offers prompt sale of medical supplier Molded Devices
    2
    Compounder Aurora Plastics breaks ground on Ohio expansion
    3
    Material Insights: July resin price drop could be start of trend
    4
    Auto supplier Gissing enters Chapter 11, owes Tesla $13.3M
    5
    Stratasys buying Covestro additive manufacturing business
    SIGN UP FOR TO RECEIVE THESE EMAILS AND ENEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Urethanes Technology
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright Ā© 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CEO Issue
        • Diversity
        • Best Places to Work
          • 2022 winners
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
          • 2022 class
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • PN Live: Mergers and Acquisitions
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified