Moody’s could lower Compass Minerals

Moody's Investors Service said it placed the Ba1 corporate family rating, Ba1-PD probability of default rating and instrument ratings of Compass Minerals International, Inc. under review for downgrade following the company's announcement that it plans to acquire the remaining 65% ownership in Brazilian specialty plant nutrition company, Produquimica Industria e Comercio SA.

The price is expected to range from $460 million to $480 million, including assumption of debt.

The company plans to finance the transaction with debt.

"Weaker earnings as a result of a mild 2015-2016 winter, weak agricultural markets, continued elevated capital spending for capacity expansions in 2016 and 2017 combined with the high valuation multiple associated with the acquisition of the remaining equity in Produquimica elevates the risk that leverage could remain above expected levels for the Ba1 rating for an extended period of time," Moody's analyst Anastasija Johnson said in a news release.

The review reflects expectations that leverage could remain elevated due to the high multiple paid for Produquimica and the lack of free cash generation at Compass, the agency added.

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