S&P rates Armacell Holdco B

S&P said it assigned a B long-term corporate credit rating to Armacell Holdco Luxembourg Sarl (Armacell Holdco).

S&P also said it affirmed the B long-term corporate credit rating Armacell Bidco Luxembourg Sarl (Armacell).

The outlook is stable.

The agency also said it affirmed the B ratings on Armacell's senior secured debt, including its first-lien €100 million revolving credit facility, €482 million first-lien term loan and €140 million first-lien debt.

The 4 recovery rating on these instruments is unchanged, indicating 35% expected default recovery.

S&P also said it withdrew the B long-term corporate credit rating on Armacell International SA.

The ratings reflect a view that the group should be able to strengthen its credit metrics over the next couple of years after a peak in debt-to-EBITDA following debt-financed bolt-on acquisitions in 2016 and 2017, the agency said.

S&P said it estimates that Armacell's adjusted debt-to-EBITDA was about 7.5x as of year-end 2016, but it will reduce to about 6.5x by the end of 2017, and decrease further to 5.5x to 6.0x in 2018.

The decline should occur as the company unlocks synergies in the newly integrated group, continues to grow in its global market and repays some of its first-lien debt, the agency said.

The ratings continue to reflect a view of the company's relatively limited scale and scope of operations compared with global building-materials producing peers and by its exposure to the cyclical construction industry, the agency added.

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