Moody’s rates Millar Western, notes B2

Moody's Investors Service said it assigned a B2 rating to the proposed C$150 million senior secured notes of Millar Western Forest Products Ltd.

At the same time, the agency assigned a B2 corporate family rating and a B2-PD probability of default rating to the company.

The outlook is stable.

Note proceeds will be used to refinance existing debt.

“Millar Western's B2 CFR is constrained by the company's relatively small size (proforma revenue of C$533 million), its private equity ownership and the significant pricing volatility of its core products bleached chemi-thermomechanical pulp (BCTMP) and lumber,” Moody’s said in a news release.

“Millar Western benefits by the company's large presence in the production of BCTMP, the comparatively low cost of its lumber and pulp operations, good liquidity and relatively strong leverage and interest coverage metrics (projected to be about 2x and 7x in 2018).”

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