Moody's may cut Olin to junk

Moody's Investors Service said it placed Olin Corp.'s Baa3 senior unsecured debt ratings on review for possible downgrade following the announcement that Olin has offered to acquire the Pioneer Cos. using a combination of cash and debt in a transaction valued at about $415 million.

The agency said the outlook had been negative reflecting concerns over the lack of profitability in the company's metals business and Olin's ability to generate reasonable metrics in the trough of the cycle; the meaningful increase in leverage associated with the Pioneer transaction further increases pressure on the company's credit profile.

The review will seek to examine the impact of the transaction on the company's credit metrics taking into account the increase in debt, anticipated synergies and additional regional diversification, Moody's said, adding that it will also seek to determine if the company's metals business can become a meaningful contributor to earnings and cash flow.

Moody's said the conclusion of the review could result a downgrade of more than one notch.

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