W.R. Grace to separate into two companies, borrow ‘fresh debt capital’

By Lisa Kerner

Charlotte, N.C., Feb. 5 – W.R. Grace & Co. announced plans to separate the company into two independent, publicly traded companies in a tax-free spinoff to Grace shareholders within the next 12 months.

“New Grace” will comprise Grace’s catalysts technologies and materials technologies business segments, excluding the Darex packaging business. “New GCP” will include Grace’s construction products business segment and the Darex packaging business.

Chief financial officer Hudson La Force expects New Grace to have net leverage of between two and 2.5 times adjusted EBITDA at the time of the spinoff. New GCP’s leverage is expected to be between three and 3.5 times.

“We do expect New GCP to borrow fresh debt capital at the time of the spin,” La Force said during a conference call on Thursday. “We would expect New Grace to substantially pay down the current term loans, and there’ll be a process associated with that as we get closer to the actual spin.”

New Grace is expected to still have some secured debt, “the exact amount we’ll be better able to estimate as we move forward,” La Force said.

Management declined to give specifics on discussions with rating agencies or possible New GCP financing during the call.

W.R. Grace is a Columbia, Md.-based specialty chemicals company.

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