S&P upgrades Caldic parent

S&P said it upgraded Caldic Group's parent company Pearls (Netherlands) Bidco BV’s issuer rating to B+ from B, its outstanding €1.1 billion-equivalent term loan B, including the new €175 million debt add-on and its €155 million revolver. The recovery rating remains at 3.

Last month, Caldic’s sponsor Advent International announced its agreement with Connell's owner Wilbur-Ellis to merge the two specialty chemicals distribution businesses. The merged company will operate under the Caldic name. The deal is expected to close in 2023’s first quarter.

Caldic intends to secure a new €175 million term loan add-on to fund the cash purchase price portion and repay drawings on the revolver used to fund bolt-on acquisitions. Wilbur-Ellis will remain a strategic shareholder, with a minority stake, with the remainder owned by Advent International.

“The transaction improves Caldic Group's deleveraging prospects, and we expect S&P Global Ratings-adjusted debt to EBITDA to stand at about 5.5x at year-end 2022. Pro forma the merger, we expect our adjusted debt-to-EBITDA ratio for the group will be about 5.5x at year-end 2022, which is better than our previous projection of about 6.5x for Caldic Group alone. The significant leverage improvement is mostly thanks to Connell's largely debt-free balance sheet and the transaction being mainly funded through a share merger,” the agency said in a press release.

The outlook is stable.

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