Standard & Poor's, the credit ratings agency, has announced that it has raised its corporate credit rating on Lake Forest, Ill.-based Pactiv to triple-'B' from triple-'B'-minus.
According to S&P, the move reflects the management's demonstrated commitment to moderate financial policies, solid operating prospects, and steady improvement to the company's financial risk profile.
The ratings agency also said that the outlook is stable for Pacitv. Total debt outstanding was about $1.2 billion (€1.2bn) as of March 31, 2002.
"Since its spin-off from Tenneco in November 1999, management has sold several non-core, low-margin businesses and used proceeds together with excess cash flows to reduce debt by about $850 million," said Standard & Poor's analyst Paul Vastola.
S&P also stated that Pactiv has strengthened its profitability and cash flow coverages by accelerating its rollout of new, higher-margin products and expanding its aggressive cost-reduction efforts. Although growth is now a key focus, management is expected to extend its track record of purchasing complementary businesses at reasonable valuations, while preserving its improved credit measures.
S&P believes that because of economies of scale and investment in innovative technologies Pactiv should be able to maintain or keep ahead of a 5 per cent growth margin in the future.
In the intermediate term, further meaningful improvement in credit measures will likely be delayed due to the company's growth plans.