Rexam pursues cash call to protect rating
DRINKS can maker Rexam is considering launching a £350m cash call this week to reassure investors over its massive £2.7bn debt pile.
The group said that tough trading conditions would hit its ability to pay down its debt next year.
Rexam, whose clients include Coca Cola and Pepsi, is desperately trying to preserve its investment grade rating after Standard & Poor’s lowered its long-term corporate credit and senior unsecured debt ratings on Rexam in February from BBB to BBB-.
The group said yesterday it “has consequently concluded that the risk of a downgrade to sub investment grade has significantly increased and has now become unacceptably high. The loss of investment grade credit rating would be detrimental to the group, both in terms of the cost and the availability of future credit.”
It added that it could see “no upturn in current trading conditions through 2009.” Shares have fallen by 14 per cent in the last year.
Rexam, whose plastic packaging is also used in healthcare and personal care products, said that although trading had not improved in recent months, its half-year results would at least meet market expectations.
Citigroup and RBS Hoare Govett, the group’s long term brokers, have been working as advisers to the potential fundraising.
Rexam yesterday said it was mulling a number of options, including an equity raising but “no final decision has yet been made”.