Moody’s lowers Avantor; rates loans B1, Caa1

Moody's Investors Service said it downgraded Avantor Performance Materials Holdings Sarl’s corporate family rating to B2 from B1 and probability of default rating to B2-PD from B1-PD; these ratings will be withdrawn.

The agency also assigned a B2 corporate family rating and B2-PD probability of default rating to Avantor, Inc., the new parent company.

In addition, Moody's assigned a B1 rating to the new first-lien senior secured term loan and Caa1 to the new second-lien senior secured term loan, all issued by Avantor's subsidiary: Avantor Performance Materials Holdings, LLC.

Proceeds from the $1,425,000,000 and $380 million new first- and second-lien term loans, respectively, will be used to refinance the existing first-lien term loan, pay a $439 distribution to shareholders and pay associated fees and expenses.

The outlook on the ratings is stable.

"The company continues to execute well on its growth and operational strategy. However, the planned $439 million debt-financed dividend signals a break in financial policy and what was expected to be an improving trend in leverage following the last two dividends and until leverage recovered to the low 4x range," Moody’s vice president, senior credit officer Joseph Princiotta said in a news release.

"This new dividend, which will increase adjusted leverage to the mid 6x range, comes on the heels of the $702 million and $140 million dividends in the second half of 2016."

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