Caraustar Industries Assigned `BBB' Credit Rtg by S&P.NEW YORK--(BUSINESS WIRE)--Oct. 20, 1998-- Standard & Poor's CreditWire 10/20/98 -- Standard & Poor's today assigned its triple-'B' corporate credit rating to Caraustar Industries Inc. and its triple-'B' bank loan rating to the company's $400 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. In addition, Standard & Poor's assigned its preliminary triple-'B' rating to the company's $300 million senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. securities filed under a Rule 415 shelf registration. The outlook is stable. Ratings reflect Caraustar's average business profile, with strong positions within various segments of the recycled paperboard paperboard, material similiar in shape and composition to paper, but generally thicker, stronger, and more rigid. Paper machines, e.g., Fourdrinier machines, are used to make sheets of paperboard. market, limited product diversity, and a moderate financial policy. Caraustar has maintained fairly stable operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: with its ability to pass on fiber costs through selling price increases, and historically has grown by efficiently consolidating acquired operations. The company sources a significant amount of its low-cost fiber from internal recycled fiber collection systems, and its mills are located close to these fiber sources to reduce transportation expense. Caraustar produces recycled board used in production of such products as tubes and cores, gypsum gypsum (jĭp`səm), mineral composed of calcium sulfate (calcium, sulfur, and oxygen) with two molecules of water, CaSO4·2H2O. It is the most common sulfate mineral, occurring in many places in a variety of forms. wallboard, and specialty items such as puzzle pieces. The company has maintained important market positions within these niche product lines. Caraustar's acquisitions historically have been limited to recycled paperboard and paperboard converting facilities, primarily to fill in product lines or to expand geographically. The company operates its paperboard mills at rates higher than the industry average, primarily resulting from flexibility to make more than one product at each mill, and to minimize outside paperboard purchases. Caraustar is a consolidator within this fragmented frag·ment n. 1. A small part broken off or detached. 2. An incomplete or isolated portion; a bit: overheard fragments of their conversation; extant fragments of an old manuscript. 3. industry and will continue to actively pursue its growth-by-acquisition strategy. Debt to capital has been about 50% for the last few years, a level with which management appears comfortable. Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. is expected to be appropriate for the rating, averaging about 35%-40% through the industry cycle. OUTLOOK: STABLE Acquisition activity is expected to continue, with any meaningful acquisitions financed in a balanced manner to prevent significant change to the current financial profile, Standard & Poor's said. --CreditWire Note to Editors: Copyright 1998, Standard & Poor's Rating Services |
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