Moody’s rates Atotech notes Caa1, view negative

Moody's Investors Service said it affirmed Atotech UK Topco Ltd.’s B2 corporate family rating and B2-PD probability of default rating.

Concurrently, the agency affirmed the B1 ratings of the $1.4 billion equivalent senior secured term loans due 2024, to be increased to $1.6 billion, the $250 million revolving credit facility due 2022, all co-borrowed by Alpha 3 BV and Alpha US BidCo, Inc. and the Caa1 rating of the $425 million senior unsecured notes due 2025, co-issued by Alpha 3 and Alpha US BidCo,.

The agency also assigned a Caa1 rating to the proposed $300 million PIK toggle notes due 2023 to be issued by Alpha 2 BV, a 100% subsidiary of Atotech UK Topco and parent company of Alpha 3.

The outlook on all ratings was changed to negative from stable.

Moody’s said the outlook change follows the company's announcement of the payment of a $500 million extraordinary dividend to its shareholders, fully financed by additional debt.

The incremental debt, split between a $200 million add-on to the existing $1.4 billion equivalent senior secured term loan facilities and the issuance of new $300 million PIK toggle notes due 2023, result in an increase of the Moody's adjusted leverage of the company of about 1.4 times to 6.9 times based on LTM March 2018 Moody's adjusted EBITDA.

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