Moody's: Univar IPO could lead to upgrade

Moody's Investors Service said the announcement that Univar Inc. (B3/stable) plans to pursue an initial public offering and a concurrent private placement of equity for roughly $750 million of new equity is a potential credit positive.

The proceeds are intended to be used to retire the $600 million 2017 subordinated notes and $50 million 2018 subordinated notes and to pay the equity sponsors $26 million in a consulting termination fee.

The agency said if the IPO and private placement are successful and all or nearly all of the proceeds, net of costs, are used to reduce debt, the ratio of debt to EBITDA would improve by roughly one full turn to mid-5 times. This prospective leverage improvement, combined with Univar's scale, ongoing cost and operational improvements, would likely warrant consideration for a one-notch upgrade to Univar's corporate family rating, Moody’s said.

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