Moody's rates AI Chem loans Ba3, B3

Moody's Investors Service said it assigned a corporate family rating of B1 and probability of default rating of B1-PD to AI Chem & CY SCA, the ultimate holding company of the subsidiary guarantors to the group's senior credit facilities.

Moody's also assigned a provisional Ba3 rating to AI Chem's proposed first-lien senior secured credit agreement and a provisional B3 to its proposed $200 million second-lien senior secured credit facility due 2020.

The first-lien senior secured credit facility consists of a $120 million revolving credit facility due 2018 and a $565 million term loan B facility due 2019.

The outlook is stable.

Cytec Industries Inc. recently announced that funds managed or advised by private equity firm Advent International Corp, have signed an agreement to acquire its coating resins business for about $1 billion in a transaction that is expected to close by the end of June 2013.

The assets of this former Cytec business are to become those of the newly established AI Chem, Moody's said. The proceeds from the proposed first-lien and second-lien senior secured credit facilities will be used to partially finance this transaction, the agency said.

The ratings reflect AI Chem's high financial leverage and an expectation that the company is likely to remain significantly exposed to a challenging European cyclical chemicals trading environment, given its expected low levels of unencumbered future free cash flow, Moody's said.

The ratings also consider the company's high financial leverage, which is expected to be about 4.2x in 2012 and pro forma the transaction, the agency said.

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