Moody’s rates Schweitzer-Mauduit loans Ba2

Moody’s Investors Service said it assigned Schweitzer-Mauduit International, Inc.’s term loans A and B and senior secured first-lien revolver Ba2.

The agency also confirmed the company’s ratings, including the Ba3 corporate family rating, Ba3-PD probability of default rating and B2 senior unsecured. Moody’s also lowered the speculative grade liquidity rating to SGL-3 from SGL-2 and changed the rating outlook to negative. These actions conclude the review for downgrade started on Jan. 28, the agency said.

The rating action follows the company’s announcement it plans to acquire Scapa Group. Schweitzer-Mauduit will finance the deal with $613 million in debt, including a new $350 million term loan B and $263 million drawn from its $500 million revolver, with the net proceeds to cover the equity purchase price, extinguish Scapa net debt and pay transaction expenses, Moody’s said.

The outlook reflects higher financial risk with stretched financial leverage amid a tenuous economic recovery with the lingering uncertain timing around the pandemic, which is likely to challenge the pace of de-leveraging, Moody’s said.

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