Moody’s ups W.R. Grace loans, rates notes Ba3

Moody's Investors Service said it affirmed the Ba2 corporate family rating and Ba2-PD probability of default rating of W.R. Grace & Co.—Conn.

The agency also upgraded the ratings on Grace's outstanding $1.55 billion first-lien senior secured credit agreement to Ba1 from Ba2. The first-lien senior secured credit agreement consists of a $400 million revolving credit facility due 2019, a $900 million term loan facility due 2021 and a $250 million delayed-draw term loan due 2021.

Concurrently, Moody's assigned a Ba3 rating to Grace's proposed $1 billion of senior unsecured notes due in 2021 and 2024.

The SGL-2 speculative grade liquidity rating was affirmed and the outlook is stable.

Proceeds from the new senior unsecured notes will primarily be used to: (a) Terminate its deferred payment obligations for asbestos-related personal injury claims of about $632 million; (b) partially fund the settlement of roughly $490 million of warrants also issued for asbestos-related personal injury claims (the remainder of the warrants will be settled with delayed-draw term loan due 2021); (c) repay around $50 million outstanding under its revolving credit facility; and (d) pay related transaction fees and expenses.

"Grace's agreement to terminate all of its deferred payment obligations for asbestos-related personal injury claims is credit positive, despite the increase in near-term leverage," Anthony Hill, Moody's vice president, senior credit officer and lead analyst for Grace, said in a news release.

Grace emerged from bankruptcy earlier this year via a Chapter 11 reorganization plan that resolved all asbestos-related personal injury and property damage claims and any future asbestos claims.

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