Moody's rates Houghton loans B2

Moody's Investors Service said it assigned a B2 corporate family rating to Houghton International and assigned B2 ratings to the company's $25 million senior secured revolver due 2010 and $90 million secured term loan due 2011.

The outlook is stable.

The ratings take into account Houghton's elevated leverage with expected debt to EBITDA of 4 times for the last 12 months ended Dec. 31, 2005, small size and limited product diversity, meaningful customer concentration, low operating margins, lack of free cash flow generated in 2001, exposure to increasing production costs, the expectation that the industry will experience ongoing operational challenges and uncertainty associated with the execution of Houghton's business strategies, Moody's said.

The ratings are supported by Houghton's competitive position as a large supplier of metal working fluids and chemicals-management services, relatively stable business profile and modest capex requirements, Moody's said.

The ratings also benefit from the relatively small size of the market, meaningful customer switching costs for new products and long-term customer relationships, Moody's said.

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