By Mariana Santibanez
NEW YORK, Feb 19 (IFR) - Moody's said on Thursday it maydowngrade US can maker Ball Corp amid the company's planned£4.43bn (US$6.85bn) acquisition of British rival Rexam Plc.
Moody's placed Ball's junk Ba1 rating on review fordowngrade, citing the company's "aggressive financial policy"among other factors.
"The review for downgrade reflects the significantdeterioration in proforma credit metrics, the length of timeuntil the close and the uncertainties inherent in the regulatoryprocess," the rating agency said.
One key risk is that, while Ball expects to close thetransaction in the first half of 2016, Rexam remains free toaccept other bids.
Moody's estimates the company's proforma leverage at morethan five times earnings, while Ball said it would be around 4.5times after the acquisition.
The company has committed debt financing in place in theshape of a £3.3bn bridge loan from Deutsche Bank, Bank ofAmerica Merrill Lynch, Goldman Sachs, KeyBank NationalAssociation, Royal Bank of Scotland and Rabobank, TRLPCreported.
Moody's meanwhile assigned a Ba1 rating to Ball's new US$3bnrevolver, which will replace an existing US$1bn facility. Italso may downgrade Rexam to junk.
2012 BOND PRICES RISE
News of the possible downgrade came as Ball announced abuyback of two outstanding senior notes - an announcement thatsent the 2021 bonds higher.
The company said the buyback offer - for its 6.75% 2020s and5.75% 2021s - was unrelated to the acquisition.
The US$500m 2021s were up 1.375 points to 106.125, a tradersaid. The issue is callable on November 15 at 102.875, accordingto Trace, but Ball will pay a premium to buy them now.
One investor estimated Ball would pay 106.25 for them.
The trader said the company's decision was likely triggeredby covenants in the bonds, which would prevent Ball from issuingmore debt while they remain outstanding.
Ball declined to comment.
The redemption price for the 2020 notes, which also haveabout US$500m outstanding, is 103.375% plus accrued and unpaidinterest - in line with the call price on March 15. (Reporting by Mariana Santibanez; Editing by Natalie Harrisonand Marc Carnegie)
