Craft beer is making an impact on the top line at Anchor Glass Container Corp, with around 23 percent of the company’s $576 million in revenue last year coming from this sector, according to a Moody’s Investors Service report assessing Anchor’s recapitalization.
Anchor, a Tampa company that manufactures glass containers, secured a $465 million term loan, a press release said. It is using the proceeds to pay down existing debt, support growth and fund a $150 million dividend to stockholders, including private equity firm KPS Capital Partners, which bought Anchor last year.
Anchor faces both challenges and opportunities, Moody’s said in the June report, issued before the new loan was finalized.
The company has a high concentration of sales, with 40 percent of its sales coming from two customers and 88 percent of sales from its top 10 customers. Just under half of total sales are attributed to beer – 23 percent from craft beer and 24 percent from mass-market beer, but volumes have decreased in mass beer for the last two years and are projected to continue to be sluggish, Moody’s said.
On the plus side, 98 percent of Anchor’s business is under long-term contracts with full cost- pass through provisions. The company has long-standing relationships, averaging 20 years, with its top customers, several of them blue-chip customers. The company also has expects the transfer of profitable business from its former owner and it has won some new business in the past year as well, Moody’s said.
Because of anticipated additional volume from the new business, along with cost-cutting initiatives and dedicating cash flow to debt reduction, Moody’s assigned a stable rating outlook to the new loan. The loan has a B3 rating, considered speculative with some credit risk. Financing for the recapitalization was provided by a syndicate of banks led by Credit Suisse Securities (USA) LLC and Barclays Bank PLC.