Moody's cuts Olin to junk

Moody's Investors Service said it downgraded the ratings on Olin Corp.'s senior unsecured notes to Ba1 from Baa3 as a result of its debt-financed acquisition of Pioneer Cos., Inc. and the continued weak performance of the company's metals business.

The acquisition is valued at $420 million and will be financed through a combination of cash and debt, according to the agency.

Moody's said it also assigned corporate family and probability-of-default ratings of Ba1 and loss-given-default ratings on the existing debt of LGD 4, 59%. These actions conclude Moody's review initiated on May 22.

The outlook is stable.

According to the agency, the downgrade reflects the concentration of profitability in a single commodity chemical product line subsequent to the acquisition, continuing concern over the weak performance of its metals segment, elevated debt levels, a sizable dividend for a cyclical company and significant, albeit declining, environmental and pension liabilities.

The Ba1 corporate family rating is supported by the expectation that the chlor alkali market will remain more profitable than previously expected into 2008, allowing the company to cut debt over the next six to 12 months, Moody's said.

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