EFTA01378343.pdf

INTERNAL USE ONLY DO NOT DISTRIBUTE IN PART OR IN WHOLE Corporate Credit > U.S. High Yield Sealed Air (SEE) Updated Sept 30, 2015 Trade Idea: ► Buy Sealed Air 5.25% Notes due 2023 ► Buy Sealed Air 5.125% Notes due 2024 Investment Rationale: ► Attractive Relative Value: Notes trade inside of the Barclay's Packaging Index (@ 5.8%) but inline with CLL and CCK - companies with a half to a full turn of higher leverage and significant integration risks on the heels of recently announced large scale debt financed acquisitions ► Cost Cutting Initiatives: Mgmt is committed to ongoing restructuring initiatives to improve the efficiency of its assets. Restructuring initiatives are expected to cost $120m in FY2015 with $50m of expected savings. Efforts — along with a commitment to premium, value add products - have yielded 120 bps of LTM EBITDA margin improvement at 2Q15. ► Solid Leverage Targets: Target net leverage of 3.5x-4.0x (vs 3.9x at 2Q15); recent refinancing of expensive 8.375% senior notes should generate $20m of annual interest savings ► Significant Free Cash Flow Generation: Excluding asbestos related payments / tax refunds, SEE maintains one of the higher levels of free cash flow at $630m on an LTM basis, or 14.2% of debt, as a reflection of its commitment to improved working capital management and low capital intensity. The company expects to generate $585m of free cash flow in FY2015 which should be more than capable of funding its heightened share repurchase program. ► Management Outlook 2015: FY2015 sales of $7.0b (+3% organic growth); EBITDA of $1.16-$1.17b up from prior $1.14-1.16b Recommendation(s): Ratings Issue Cash View Trade Horizon Ticker Cpn Maturity S&P Moody's Ccy Size YTW OAS Price Target Loss I SIN +1 12 Months SEE 5.25% 4 1 2023 BB B1 USD rti 5.08% rnl 101.00 103.0 97.0 U581211KALI43 •1 12 Months SEE 5.125% 12/1/2024 68 Et1 USD rin 5.33% FM 98.50 100.5 U5U81193AN11 • Levels as of 9/30/2 Deutsche Asset & 'Afe th Management CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075512 CONFIDENTIAL SDNY_GM_00221696 EFTA01378343