Moody's rates MacDermid loans B1, notes B2, Caa1

Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to MacDermid, Inc., B1 ratings with loss-given-default assessments of LGD3 (33%) to the company's proposed $50 million guaranteed senior secured revolving credit facility due 2013 and $510 million guaranteed senior secured term loan due 2014, a B2 (LGD4, 53%) rating to its proposed $250 million guaranteed senior unsecured notes due 2014-2015 and a Caa1 (LGD6, 92%) rating to its proposed $215 million guaranteed senior subordinated notes due 2017.

The outlook is stable.

Proceeds from the new debt offerings, combined with private equity investments from funds managed by Court Square Capital Partners and Weston Presidio and an investment from MacDermid's chief financial officer Daniel Leever and management, will be used to purchase all of MacDermid's outstanding stock in a transaction valued at $1.3 billion.

The agency said the B2 corporate family rating reflects MacDermid's high leverage, elevated interest expense and limited growth opportunities in certain businesses. The company has grown top line sales over the past three years, but earnings have not kept pace. Moody's expect that MacDermid should be better positioned to grow after the introduction of certain new products and the integration of the 2005 Autotype acquisition.

The ratings are supported by MacDermid's relatively stable EBITDA margins, which have remained positive despite some adverse market conditions over the past seven years; geographic, operation and product diversity; strong market positions in certain niche markets; modest capital expenditure requirements and limited exposure to volatile raw materials costs, Moody's said.

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