Moody’s applies B2 to Stahl CFR, loans

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Stahl Group SA.

Concurrently, the agency assigned a provisional B2 to the $600 million senior secured term loan B and to the €45 million equivalent multi-currency senior secured revolving credit facility, which will be borrowed by Dutch Newco, a 100% owned subsidiary of Stahl.

The outlook is stable.

Proceeds from the loans will be used to repay in full the existing debt of the company, fund an extraordinary distribution and pay associated transaction costs.

The transaction is expected to close by the end of July 2015.

Moody’s said the corporate family rating supported by Stahl's: (a) Strong and defensible position in its reference leather chemical market, with a comprehensive product portfolio further enhanced after the recent acquisition and integration of Clariant Leather Services, a former competitor; (b) long-term relationships with customers due to the company's ability to provide sophisticated customer service and tailored solutions, via a global network of facilities, laboratories, R&D centers and highly trained and experienced technical sales staff; and (c) resilient and good profitability, due to its relatively low fixed cost base, ability to pass on raw material price increases to customers and focus on the more profitable and less price sensitive segments of the main end markets served, namely premium automotive and leather goods.

The rating also reflects historical and projected positive free cash flow generation, due to limited capex and working capital requirements, the agency said.

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