S&P affirms Dynacast on acquisition news

S&P said it affirmed the B corporate credit rating on Dynacast International LLC.

The agency also said it affirmed the B rating on the company's existing first-lien term loan due 2022.

The 3 recovery rating is unchanged, indicating 50% to 70% expected default recovery.

S&P also said it affirmed the B- rating on the company's second-lien term loan due 2023.

The 5 recovery rating is unchanged, indicating 10% to 30% expected default recovery.

The outlook is stable.

Dynacast recently announced that it will acquire Signicast LLC for about $375 million, the agency said.

S&P said it expects the acquisition will be leverage neutral for Dynacast because the incremental EBITDA from Signicast, along with the continued expansion of the company's margins in its base business, will mostly offset the additional debt used to fund the transaction.

Dynacast will continue to experience some softness in consumer demand in the Asia Pacific and continued negative foreign-currency exchange pressures, the agency said.

But contributions from Signicast's business, strong demand in the company's automotive end markets and continued cost efficiencies will enable Dynacast to modestly expand its EBITDA margins to about 20% in 2017 from an estimated 19% at year-end 2016, S&P said.

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