Moody’s lowers Compass Minerals

Moody’s Investors Service said it downgraded the corporate family rating of Compass Minerals International, Inc. to Ba2 from Ba1 and probability of default rating to Ba2-PD from Ba1-PD.

The downgrades also include the ratings on the company’s $300 million senior secured revolving credit facility due July 2021 to Ba2 (LGD 3) from Ba1 (LGD 3), $400 million senior secured term loan due July 2021 to Ba2 (LGD 3) from Ba1 (LGD 3) and $250 million senior unsecured notes due July 2024 to B1 (LGD 5) from Ba2 (LGD 5).

The company’s SGL-3 speculative grade liquidity rating was affirmed.

The downgrades conclude a review that began in Aug. 16 when the company announced plans to acquire the remaining 65% ownership in Produquimica Industria e Comercio SA, Moody’s explained.

The agency also said it assigned a Ba2 rating to a new $450 million new senior secured term loan due 2021.

The proceeds of the term loan will be used to acquire the remaining 65% of equity in Produquimica and retire a portion of the debt that Compass Minerals expects to assume from Produquimica at closing, Moody’s said.

The outlook is stable.

The downgrades reflect the increased leverage pro forma for the 100% debt-funded acquisition and resulting reduced financial flexibility as the company will get significant cash flow to pay down debt only in years of above-average snow events, the agency said.

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