Moody's rates Orion notes Caa1, Kinove to negative

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Orion Engineered Carbons Holdings GmbH.

The agency also said it withdrew the B2 corporate family rating of Orion Engineered Carbons Bondco GmbH (Kinove), a wholly owned subsidiary of Orion.

The outlook is negative.

Moody's also said it has changed the outlook to negative on the existing Ba2 rating of Kinove's super senior revolving credit facility and the B2 rating of its senior secured guaranteed notes. The ratings were affirmed.

The negative outlook is driven by the announced $390 million of senior secured guaranteed payment-in-kind toggle notes, which were assigned provisional Caa1 ratings.

The toggle notes are to be issued by Orion Engineered Carbons Finance & Co SCA, which is a special purpose entity owned and guaranteed by Kinove Luxembourg Holdings 1 Sarl, the ultimate parent of Orion, Moody's said.

The proposed transaction will add to the company's leverage with adjusted total debt-to-EBITDA expected to rise toward 5x pro-forma for the transaction compared to a previously expected debt-to-EBITDA of about 3x for 2012, the agency said.

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