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Moody’s lowers Kraton; rates loan Ba3, notes B3
Moody's Investors Service said it downgraded Kraton Performance Polymers, Inc.'s corporate family rating to B1 from Ba3, assigned ratings to its new term loan and notes and revised the outlook to stable.
These actions conclude the review that was initiated on Sept. 29 subsequent to the announcement of the acquisition of Arizona Chemical Holding Corp.
Kraton's new $1.35 billion senior secured first-lien term loan is rated Ba3 and its new $425 million senior unsecured notes are rated B3.
Proceeds from the new term loan and notes will be used to fund the acquisition of Arizona for a purchase price of $1.37 billion, refinance existing debt, and for fees and expenses. Kraton also put in place a $250 million ABL revolver due 2020 to support working capital; it is unrated.
The downgrade reflects Moody's expectations that Kraton's leverage will remain elevated for the next 12 to 15 months until the cost cutting programs and synergies begin to positively impact free cash flows and Kraton is able to repay debt. The acquisition is expected to close at the end of 2015 or early in 2016.
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