S&P: BD White Birch Investment LLC Outlook Revised To Stable On Improved Newsprint Pricing; Ratings Affirmed
"The stable outlook reflects our view that shipping volumes and pricing in newsprint paper will remain stable over the next 12 months and should support current credit metrics," said S&P Global Ratings credit analyst Thomas O'Toole. "The secular decline that the newsprint industry is undergoing is a slow, long-term trend which, in our view is unlikely to impact the credit rating in the short term."
We could lower the rating on BD White Birch if newsprint prices declined more quickly and further than we expect from current levels and debt to EBITDA rose above 8x and/or interest coverage fell below 1x. This could happen if global demand declines at a faster rate than industrywide capacity.
We view an upgrade as unlikely in the near term given that we expect BD White Birch will remain leveraged above 5x, and given its ownership by a financial sponsor. However, we could potentially raise the rating on BD White Birch if the specialty paper segment grew to be a larger percentage of total revenue to the extent that the company was less exposed to traditional newsprint pricing and demand and if debt to EBITDA leverage was sustained below 5x.