New Zealand-based Reynolds Group 'comfortable' with its US$18.1B of debt leveraged over its packaging empire, isn't looking at further debt-laden acquisitions and likely to look at 'deleveraging a bit,' CEO says

Graziela Medina Shepnick

LOS ANGELES , April 2, 2012 (Industry Intelligence) –

With current debt of US$18.1 billion, Reynolds Group Holdings Ltd. is not likely to look for any debt-laden acquisitions and will probably seek to reduce its leverage relative to earnings and equity, said the packaging conglomerate’s chief, reported The New Zealand Herald on April 2.

Reynolds Group is “comfortable” with the current debt level leveraged over its expansive packaging empire and “we’ll probably be deleveraging a bit,” CEO Tom Degnan told analysts in a conference call last week.

The company doesn’t plan to look at “anything of a kind of $5-billion size,” but “more in the tack-on area” might be considered, he said, The New Zealand Herald reported.

Last year, Reynolds Group’s ability to keep up with interest repayments after it purchased Graham Packaging Co. LP for $4.5 billion and raised its debt level put rating agencies Standard & Poor’s and Moody’s Investors Service on edge.

Since 2006, when Hart began building his packaging empire, Reynolds Groups has amassed total assets valued at $21.89 billion on total liabilities of $22.07 billion, as of Dec. 31, 2011, reported The New Zealand Herald.

Reynolds Group has some $1.2 billion in cash on its balance sheet as of Dec. 31, 2011 to act as a liquidity buffer, CFO Allen Hugli told analysts. To refinance bonds set to mature in 2017 and add to its cash buffer, the packaging group raised $1.25 billion of new debt in February.

During the year, the company’s revenue increased 74% to $11.79 billion, while the bottom-line loss grew to $417 million from $97 million the previous year, The New Zealand Herald reported.

The primary source of this article is The New Zealand Herald, Auckland, New Zealand, on April 2, 2012.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.