Moody’s rates KMG loans B2

Moody's Investors Service said it assigned a B2 corporate family rating, a B2-PD probability of default rating and an SGL-2 speculative-grade liquidity rating to KMG Chemicals, Inc. and B2 (LGD3) ratings to its proposed $50 million first-lien senior secured revolving credit facility and $550 million first-lien senior secured term loan. The outlook is stable.

Proceeds will be used to fund the purchase of Flowchem LLC for $495 million and to repay borrowings under KMG's existing revolving credit facility.

The agency said KMG's track record integrating previous acquisitions and solid expected cash flow generation helps offset the high financial leverage expected following the debt-funded acquisition of Flowchem.

The company’s B2 corporate family rating is constrained by high financial leverage, modest organic growth prospects and an acquisition-driven growth strategy, Moody’s said.

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