PLEASE READ AND SCROLL DOWN !

By clicking “I AGREE”, you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s information that becomes accessible to you (the “Information”). References herein to “Moody’s” include Moody’s Corporation. and each of its subsidiaries and affiliates. .

Terms of One-Time Website Use

1.              Unless you have entered into an express written contract with www.moodys.com to the contrary and/or agreed to the Terms of Use at www.moodys.com or ratings.moodys.com, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.                    

2.             CREDIT RATINGS AND MOODY’S MATERIALS FOUND ON WWW.MOODYS.COM OR SITES OTHER THAN RATINGS.MOODYS.COM MAY NOT BE DISPLAYED IN REAL TIME. FOR REAL-TIME DISPLAYS OF CREDIT RATINGS AND OTHER INFORMATION REQUIRED TO BE DISCLOSED BY MIS PURSUANT TO APPLICABLE LAW OR REGULATION, PLEASE USE RATINGS.MOODYS.COM.           

3.             You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities. Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision. No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.

4.             To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.     

5.             You agree to read and be bound by the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information. ​​​

6.             You agree that any disputes relating to this agreement or your use of the Information, whether in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan. ​​​

New York, September 15, 2022 -- Moody's Investors Service ("Moody's") affirmed Liqui-Box Holdings, Inc. ("Liqui-Box")'s B3 Corporate Family Rating (CFR), Caa1-PD Probability of Default Rating (PDR), and B3 rating on the company's senior secured bank credit facility. The outlook was revised to stable from negative.

The stabilization of the outlook reflects Liqui-Box's successful integration of the DS Smith Plastics Division acquisition, including achievement of planned synergies, which is evident with the improved quality of earnings. The outlook further reflects Moody's expectation of free cash flow generation resulting from normalized capital expenditures, working capital, and successful pricing initiatives to capture inflationary costs.

"With the integration of the transformative DS Smith Plastics Division acquisition complete and implementation of price initiatives to offset inflationary costs, we expect Liqui-Box to generate free cash flow and improved EBITDA that will ultimately reduce leverage and strengthen the balance sheet," said Scott Manduca, Vice President at Moody's.

.... Corporate Family Rating, Affirmed B3

.... Probability of Default Rating, Affirmed Caa1-PD

....Gtd Senior Secured Term Loan, Affirmed B3 (LGD3)

....Gtd Senior Secured Revolving Credit Facility, Affirmed B3 (LGD3)

....Outlook, Changed To Stable From Negative

Liqui-Box's B3 CFR reflects its very high pro-forma leverage at 7.9x as of June 30, 2022, which has remained elevated due to incremental debt raised to repay revolver borrowings. The rating also considers Liqui-Box's track record of debt-funded acquisitions, including the transformative acquisition of DS Smith Plastics Division and bolt-on acquisition of Strazaplastika. Further, the company faces customer concentration and some exposure to cyclical end markets such as industrials and construction.

Liqui-Box is expected to benefit from improving earnings supported by synergies achieved from the DS Smith Plastics Division acquisition and further plant consolidation, while cost pass-through price initiatives help mitigate the effects of input cost, labor and energy inflation. We expect leverage to improve toward 6.5x in 2023 based on these factors. The rating also reflects the company's significant exposure to relatively stable end markets such as food, beverage, pharmaceuticals, and household goods and its long-term customer contracts with high switching costs for customers.

Liqui-Box's liquidity is adequate and encompasses an expectation of improving free cash flow generation over the next 12 months. However, in addition to cash of $22 million as of June 30, 2022, the company had $52 million of borrowings under the company's $75 million revolver. Going forward, revolver borrowings are expected to be repaid with free cash flow and cash is to build, as capital expenditures return normalized levels post the integration of acquisitions. The only financial covenant on the credit facilities is a static total net leverage covenant of 7.5x. Moody's expects the company to maintain adequate cushion under this covenant over the next 12 months, but an acceleration in debt-funded acquisitions, any further integration challenges, or a cyclical downturn in the company's end markets (industrial, construction, logistics, graphics) would put this cushion at risk. Term loan amortization is 1.0% annually and the facility contains an excess cash flow sweep. US assets are fully encumbered by the secured debt and the European assets provide a modest degree of alternative liquidity as they are not part of the collateral package. The nearest significant debt maturity is the $75 million revolver in February 2025.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Moody's could downgrade the company's ratings if credit metrics, liquidity or the competitive environment deteriorate. Debt-funded acquisitions entailing significant integration risk could also jeopardize the rating. Specifically, the ratings could be downgraded if debt-to-EBITDA (inclusive of Moody's adjustments) remains above 6.5 times, funds from operations-to-debt is sustained below 7.0%, and EBITDA-to-interest coverage is sustained below 2.25 times.

Moody's could upgrade the ratings if the company is able to sustainably improve credit metrics and maintain good liquidity. Specifically, the ratings could be upgraded if debt-to-EBITDA (inclusive of Moody's adjustments) declines below 5.5 times, funds from operations-to-debt is sustained above 9.0%, and EBITDA-to-interest coverage is sustained above 3.0 times.

Headquartered in Richmond, Virginia, Liqui-Box is a manufacturer of flexible and rigid packaging.  Liqui-Box is a portfolio company of Olympus Partners and does not publicly disclose financial information.

The principal methodology used in these ratings was Packaging Manufacturers: Metal, Glass and Plastic Containers published in December 2021 and available at https://ratings.moodys.com/api/rmc-documents/360650 . Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions .

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com .

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com .

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235 .

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com .

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com .

Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.

Scott Manduca Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

Gretchen French Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

Dial 1-866-330-MDYS (1-866-330-6397)

Dial the AT&T Direct Dial Access® code for

Then, at the prompt, dial 866-330-MDYS