Moody's rates Kraton facility B1, notes B3

Moody's Investors Service said it assigned a B3 rating to Kraton Polymer LLC's proposed senior subordinated notes and a B1 rating to its proposed senior secured credit facility. Moody's also affirmed the company's B1 senior implied rating.

The outlook is stable.

Moody's said the ratings consider the substantial increase in debt that will result from Texas Pacific Group's and J.P. Morgan Partners' (the sponsors) purchase of Kraton. The sponsors purchase price of $770 million exceeds the $520 million price paid by Ripplewood when it originally acquired Kraton from Royal Dutch/ Shell Group in February 2001 and total pro forma debt of $560 million is $145 million greater than the debt assumed in the initial transaction.

The ratings also recognize that pro forma credit metrics are weak for the ratings category and that management will need to focus on debt reduction. In light of the anticipated increase in Kraton's debt, Moody's said it derives some comfort from the company's leading global market position in SBC's and its sound historical free cash flow.

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