Moody's rates Dynacast loans Ba3, Caa1

Moody's Investors Service said it assigned a B2 corporate family rating, a B2-PD probability of default rating and an SGL-3 speculative grade liquidity rating to Dynacast International LLC, Ba3 (LGD3) ratings to its $530 million first-lien term loan and $50 million revolving credit facility and a Caa1 (LGD5) rating to its $170 million second-lien term loan. The outlook is stable.

Proceeds from the debt issuance will be used to fund the acquisition of Dynacast by affiliates of Partners Group (USA) Inc. and Kenner & Co., Inc. Ratings on the old Dynacast International Inc. will be withdrawn upon closing of the transaction.

The agency said the new ratings reflect the increase in debt used to finance the acquisition, the highly competitive business environment and its view that the sponsor change may have an impact on the direction of the company. The pro forma ratio of debt to EBITDA is expected to increase to around 5.9 times from 4.9 times for the last 12 months ended Sept. 30.

These factors are offset by EBITDA-to-interest coverage of more than 2 times and positive free cash flow, Moody’s said, adding that the company has good geographic diversity.

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