S&P: Brenntag Holding still on watch

Standard & Poor's said that Brenntag Holding GmbH & Co. KG's B+ long-term corporate credit rating remains on CreditWatch with negative implications, where it was placed on July 25 following the announcement that the company is to be acquired by funds advised by private equity firm BC Partners.

The agency said that the B+ senior secured debt rating on Brenntag's €1.54 billion bank loan and B- subordinated debt rating on its €305 million second-lien loan also remain on CreditWatch with negative implications.

The recovery rating of 2 on the group's €1.54 billion senior secured debt had not been placed on CreditWatch, S&P noted, adding that its preliminary evaluation of Brenntag's strategy and financing under its new shareholder, BC Partners advised funds, is that the ratings are expected to be lowered by one notch due to the incremental debt being incurred in connection with the buyout, future funding requirements and risks of executing the company's growth strategy that is likely to absorb most of the free cash flow and keep leverage high.

However, the company's track record of growth by acquisition, increasing operating efficiency in recent years and managing profitably through the chemical industry price cycle somewhat mitigate these risks, S&P said.

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