Fitch rates Rhodia revolver BB; notes B+, B-

Fitch Ratings said it assigned a B+ issuer default rating to Rhodia SA, a BB rating with a recovery rating of RR2 to the company's revolving credit facility, B+/RR4 ratings to its senior notes due 2010 and B-/RR6 ratings to its senior subordinated notes due 2011. The agency also assigned expected ratings of B+/RR4 to the senior notes due 2013 expected to be issued as part of Rhodia's refinancing of its senior notes due 2010.

The outlook is stable.

The agency said the ratings reflect Rhodia's well-diversified sales by geography and product, leading market position for two thirds of its net sales and prudent organic growth strategy. They also take into account the progress management has made in improving recurring EBITDA margins over the last two years.

The ratings are constrained, however, by the company's weak cash flow generation, as Rhodia has yet to translate a larger part of its profitability into cash flows. Fitch said weak cash conversion has kept cash coverage ratios at low levels: at June 30, last-12-months funds from operations tonet interest expense was 2.1 times and operating EBITDAR to net interest expense was 2.7 times.

Net debt to adjusted EBITDA was 3.2 times at June 30.

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