S&P Places AEP Industries (AEPI) Ratings on CreditWatch Positive Amid Merger Agreement

August 25, 2016 2:43 PM EDT

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S&P Global Ratings said that it has placed all of its ratings on AEP Industries Inc. (Nasdaq: AEPI), including our 'B' corporate credit rating, on CreditWatch with positive implications.

"AEP Industries Inc. is a North American-based manufacturer of flexible plastic packaging films," said S&P Global credit analyst Daniel Lee. "The CreditWatch placement follows AEP's announcement that it has agreed to be acquired by Berry Plastics Group, a global leader in the rigid and flexible packaging space." We could potentially raise our ratings on AEP by more than one notch if the transaction closes as we expect, given that we currently have a 'BB-' corporate credit rating on Berry Plastics.

We expect to update the CreditWatch placement over the next 90 days following the close of the acquisition, which is expected to occur by the end of December 2016. We expect to raise our corporate credit and issue-level ratings on AEP Industries by multiple notches if the transaction closes as currently outlined. However, we also expect to subsequently withdraw our ratings on AEP because we anticipate that all of its outstanding rated debt will be redeemed at the close of the transaction.

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