Moody’s ups Archroma PDR; rates facilities B1, Caa1

Moody's Investors Service said it affirmed the B2 corporate family rating of SK Spice Holdings Sarl (SK Holdings), the ultimate parent holding company of the Archroma Group.

Concurrently, the agency upgraded Archroma's probability of default rating to B2-PD from B3-PD to reflect the new contemplated covenant-lite capital structure comprised of first- and second-lien bank debt.

Moody’s also assigned a provisional B1 rating to the new $680 million-equivalent senior secured term loan B due 2024, to the new senior secured capex facility due 2023 and to the new committed senior secured revolving credit facility due 2023, and a provisional Caa1 rating to the new senior secured second-lien facility due 2025.

All new proposed facilities will be borrowed by Archroma Finance Sarl, a new holding vehicle set up for the purpose of the transaction.

The outlooks are stable.

The new term loan B and second-lien facility, together with $202 million (10% common equity and 90% preferred equity certificates (PECs) preliminarily assessed by Moody's as equity) being injected from the new fund of the current private equity owner SK Capital Partners (SK Fund IV), will be used to repay the existing rated debt instruments in full and to pay $202 million to the current shareholders (SK Fund III) for the sale of a roughly 50% stake and a $252 million extraordinary distribution to existing shareholders.

The residual 50% stake in Archroma owned by existing shareholders including SK Fund III, worth $202 million in aggregate, will be rolled-over (90% in the form of new PECs).

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