Investing.com -- Moody’s Ratings has upgraded Berry Global, Inc.’s senior unsecured notes to Baa2 from Ba1, following the closure of the company’s acquisition by Amcor (NYSE: AMCR ) Plc on April 30, 2025. The upgrade also includes Berry Global’s first lien senior secured notes due in January and July 2026. The rating agency has noted a stable outlook for the company.
The upgrade is reflective of the parent guarantee provided by Amcor Plc upon the completion of the acquisition. The notes of Berry Global now benefit from an unconditional guarantee from Amcor and join a group of guarantors including certain Amcor subsidiaries such as Amcor Finance (USA), Inc., Amcor Flexibles North America, Inc., Amcor Group Finance plc, and Amcor UK Finance PLC.
Moody’s has withdrawn the Ba1 corporate family rating (CFR) and the Ba1-PD probability of default rating (PDR) for Berry Global Group (NYSE: BERY ) Inc. The SGL-1 Speculative Grade Liquidity Rating (SGL) assigned to the company has also been withdrawn. Additionally, the Ba1 ratings on Berry Global, Inc.’s senior secured term loans and the Ba2 ratings on the company’s senior secured second lien notes have been withdrawn as these were repaid upon the acquisition’s closure.
The Baa2 ratings are indicative of the parent guarantee from Amcor plc. Most of Berry Global’s notes, excluding the 2026 notes, will benefit from the same guarantor group as Amcor’s existing senior unsecured notes. The notes due in January and July 2026 will not have cross guarantees from Amcor’s subsidiaries but will remain secured with an equity pledge from Berry Global, Inc. and a parent guarantee from Amcor Plc.
Following the merger with Berry Global, Amcor has become the largest plastic packaging company in the industry with a revenue scale of $24 billion. The merger is expected to enhance Amcor’s product offerings in the stable sectors of food & beverage, home care, personal care, and healthcare.
The merger is also expected to improve Amcor’s EBITDA margin and cash flow generation due to cost synergies and benefits of scale. It is anticipated that future divestitures and free cash flow will provide Amcor with opportunities to reduce absolute debt.
Despite high pro forma leverage at the closing of nearly 4.0x adjusted debt-to-EBITDA, improvements in leverage are expected due to earnings growth and proceeds from targeted divestitures. The leverage is expected to decline to 3.6x and 3.2x debt to EBITDA at the end of fiscal years June 2026 and 2027 respectively.
Amcor’s credit profile is limited by integration risks related to the merger, high debt, and a shareholder-friendly financial policy that includes a high dividend payout ratio and opportunistic share repurchases. Amcor’s liquidity is sufficient with $445 million of cash as of December 31, 2024, and access to a $3.75 billion revolving credit facility expiring in 2030, which can be increased to $4.75 billion at Amcor’s discretion.
The stable outlook is based on Moody’s expectation that Amcor will effectively manage integration risks, execute cost synergy initiatives, manage potential input cost inflation, and improve credit metrics and cash flow.
The ratings could be upgraded with evidence of sustained improvement in credit metrics including adjusted debt-to-EBITDA near 2.75x, and EBITDA margin above 20%. Conversely, the ratings could be downgraded if there is a deterioration in liquidity or lack of synergy realization that weakens credit metrics.
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