DOW JONES NEWSWIRES
Sealed Air Corp. (SEE) reached an agreement with lenders that eases terms on its debt, giving the struggling maker of bubble wrap and plastic packaging products leeway to navigate the recession.
The deal will give the company "additional financing flexibility," said Sealed Air, and possibly allow the credit line to rise to $750 million from the $472 million currently available.
The announcement comes a month after Standard & Poor's Ratings Services warned it might push Sealed Air's credit ratings into junk territory as the company may face "significant refinancing requirements" starting next year.
As part of its review, S&P had noted Sealed Air would have to pay some $700 million as part of an asbestos settlement linked to the bankruptcy emergence of W.R. Grace. If it used all but $100 million of cash on hand to finance it, the percentage of funds from operations to debt would be lower than is typical for companies with a BBB- rating, S&P said. That is the lowest investment-grade level.
Sealed Air's results have been pressured the past several years by the increased cost of resin, a key product ingredient. As developed economies continue to suffer in the global economic slowdown, demand for protective packaging has slowed. In October, the company said price increases managed to recover about two-thirds of higher resin costs. But higher freight rates and energy costs also ate into the bottom line.
Sealed Air closed Friday at $14.75 and shares were inactive premarket.
-By Mike Barris, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com
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