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Moody's cuts Basell, rates loans Ba2, B2, B3
Moody's Investors Service said it downgraded the corporate family rating of Basell AF SCA to B1 to reflect its ongoing acquisition of the Lyondell Chemical Co.
Moody's downgraded legacy $300 million 2027 notes issued at Basell Finance Co. from B2 (LGD5, 84%) to B3 (LGD6, 90%) and legacy $615 million and €500 million 2015 notes issued at Basell AF SCA from B2 (LGD5, 84%) to B3 (LGD6, 90%).
Moody's downgraded legacy 2026 7.55% notes issued at Lyondell Chemical Co. from B1 (LGD4, 64%) to B3 (LGD5, 84%), legacy 2026 7 5/8% notes issued at Millennium America Inc. from B1 (LGD4, 66%) to B3 (LGD 6, 96%). The legacy 2010 10¼%% notes issued at Lyondell Chemical Worldwide, Inc. were downgraded from B1 (LGD5, 73%) to B3 (LGD6, 96%) and its legacy 2020 9.8% notes from B1 (LGD5, 73%) to B3 (LGD6, 96%).
Moody's also assigned a provisional Ba2 (LGD2, 27%) rating to the $12.45 billion in senior secured first-lien facilities, including $1 billion revolver, a B2 rating (LGD5, 74%) to $5.5 billion senior secured second-lien facilities and B3 rating (LGD 6, 90%) to the proposed $2.5 billion senior unsecured notes supporting the proposed $20 billion acquisition of Lyondell Chemical Co.
The outlook is stable.
The action concludes the review of Basell ratings initiated on June 26 following the company's agreement to acquire Huntsman Corp. and to acquire Lyondell Chemical Co., as Huntsman accepted a competing offer by Hexion Specialty Chemicals Inc. and terminated the agreement with Basell.
The downgrade of Basell's corporate family rating reflects Moody's concern about the substantial absolute amount of debt assumed by the combined group at this stage of the extended petrochemical cycle. Moody's said it estimates that following the closing, Basell's leverage will approach 5 times pro forma EBITDA on a non-adjusted basis.
The rating, however, is underpinned by the expectation of a resolute de-leveraging in the first 18 months and $420 million in synergies from 2008 through 2010, the agency said.
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