Moody’s reviews Arizona Chemical

Moody's Investors Service said it placed Arizona Chemical Holdings Corp.’s Ba3 ratings under review for downgrade following the announcement that Kraton Performance Polymers, Inc. (Ba3, under review for downgrade) entered into an agreement to acquire Arizona for $1.37 billion.

The proposed transaction is projected to include a refinancing of the entire debt of the combined companies ($1,775,000,000 in total debt), which should retire all of Arizona Chemical's outstanding debt.

If the financing for the acquisition is completed as planned, Arizona Chemical's ratings would be withdrawn. The transaction values Arizona Chemical at 7.4 times EBITDA for the last 12 months ending June 30, or 5.5 times including synergies. The acquisition is subject to regulatory approvals and is expected to close by the end of 2015 or beginning of 2016.

Moody’s said the review for downgrade reflects the expected increase in Kraton's leverage following the acquisition and the possibility that the proposed capital structure could change.

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