Moody's rates AZ Chem loan B1

Moody's Investors Service said it assigned a B1 corporate family rating and B1 probability of default rating to Arizona Chemicals Holdings Corp., for its recapitalization in connection with American Securities LLC's definitive agreement to acquire it from Rhône Capital LLC.

The total transaction consideration is estimated to be about $790 million.

The agency also said it assigned a B1 (LGD 3, 47%) rating to AZ Chem US Inc.'s $50 million senior secured revolver due 2015, along with a B1 (LGD 3, 47%) rating on its $470 million first-lien senior secured term loan due 2016.

The agency also upgraded AZ Chem US Inc.'s $50 million guaranteed first-lien revolving credit facility due 2012 to Ba3 (LGD 3, 32%) from B1 (LGD 3, 33%), $140 million first-lien term loan due 2013 to Ba3 (LGD 3, 32%) from B1 (LGD 3, 33%) and $136 million second-lien term loan due 2014 to B3 (LGD 5, 76%) from Caa1 (LGD 5, 79%)

The agency also upgraded AZ Chem Sweden AB's $100 million equivalent euro first-lien term loan due 2013 to Ba3 (LGD 3, 32%) from B1 (LGD 3, 33%).

The ratings are constrained by the company's weak pro forma credit metrics, Moody's said.

Other factors constraining the ratings include the small revenue base of Arizona and reliance on a single primary business, the agency added.

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