EFTA01378335.pdf

INTERNAL USE ONLY DO NOT DISTRIBUTE IN PART OR IN WHOLE Corporate Credit > U.S. High Yield Berry Plastics (BERY) Updated: Sep 8, 2015 Removed: ► no longer expects to fund AVINTIV acquisition with equity ; high beta / high leverage credits not doing well given mkt technicals Investment Rationale: ► Recent Acquisition Announcement: BERY's pending $2.45b purchase of AVINTIV provides greater sales distribution (in solid consumer segments of hygiene and healthcare), broadens international presence into high growth EM and provides $50m synergies — with potential upside. ► Attractive Relative Value: Notes trade inside of the Barclay's Packaging Index (@ 5.6%) but wide to fellow companies within the packaging space with leveraging acquisitions such as BLL, CCK and O1 ► Deleveraging Initiatives: While the AVINTIV purchase could raise leverage to 5.5x, management stated that it could potentially raise equity to help fund the purchase (to improve net leverage to 5.0x) and thereafter expects to reduce leverage to a more conservative 2- 4x; previously BERY responsibly repaid $100m on its term loan and called its 9.75% notes which reduced interest expense by —$40m ► Attractive New Product Portfolio: BERY's product innovations could allow BERY to capture additional share within the competitive plastic segment; its Versalite cups have been well received by customers while NYC's recent ban on Styrofoam cups and packages has helped generate increased interest from potential customers; mgmt is excited about potential innovation using AVINTIV technology ► Benefit From Lower Oil Prices: As one of the largest users of resin in the plastic packaging space (at 50% of BERY COGS), reduced oil should translate into lower input costs for the packager. The impact could positively expand margins , even despite BERY's high usage of pass-through contracts, and provide upside to the company's free cash flow projections. ► Management Outlook 2015: Free cash flow guidance recently raised to $400mm from $350mm on positive impact of declining resin costs and this cash generation guidance may continue to prove conservative. Recommendation(s): Ratings Issue Cash View Trade Horizon Ticker Cpn Maturity S&P Moody's Ccy Size YYW OAS Price Target loss SiN ISM 12 Months BERY 5.50% 5/15/2022 a- B3 USD 500 5.2% 335 101.25 104 98 US085790AX14 • Levels as of 8/3/2015 Deutsche Asset 44 & Vsfe th Management CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075504 CONFIDENTIAL SDNY_GM_00221688 EFTA01378335