Moody’s rates Valtris, facilities

Moody's Investors Service said it assigned a B3 corporate family rating to Polymer Additives, Inc. (Valtris Specialty Chemicals).

The agency also assigned B3 ratings to the company's proposed senior secured first-lien revolver and term loan, as well as a Caa2 rating to its second-lien term loan, all to be issued by Polymer Additives and guaranteed by its direct holding company and each of its direct and indirect wholly owned domestic subsidiaries.

The outlook is stable.

Term loan proceeds will be used to refinance Valtris' existing term loans and to fund the potential acquisition of business divisions from Ineos Group Holdings SA (Ba2 stable) for €111 million, which was announced in May.

Moody’s said the B3 corporate family rating is constrained by Valtris’ low EBITDA margin at about 10%, after consolidating Ineos' businesses, and high debt leverage of about 7 times, based on the agency’s estimates and including analytical adjustments.

“We expect transaction related fees and expenses will delay free cash flow generation to 2019 and, despite low maintenance capital expenditures, the overall pace of debt reduction will likely be moderate considering potential restructuring and reinvestment needs,” the agency said in a news release.

“The ownership by a private equity firm also constrains Valtris' credit profile given possible acquisitions, refinancing activities or shareholder remunerations.”

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