Moody's raises Archroma

Moody's Investors Service said it upgraded to B2 from B3 the corporate family rating and to B2-PD from B3-PD the probability of default rating of Archroma Holdings Sarl. Moody's also affirmed the B2 the guaranteed senior secured first-lien term loan B due in 2024 and the $75 million committed guaranteed senior secured revolving credit facility and the $75 million equivalent guaranteed senior secured term loan facility, both due in 2023.

The agency said it plans to withdraw the rating on the second-lien facility due in 2025 upon its full repayment this month. The borrower of all these facilities is Archroma Finance Sarl, a holding company 100% controlled by Archroma Holdings.

“The upgrade of Archroma's CFR to B2 reflects the relatively swift recovery (15% sales growth in fiscal 2020/21) from the Covid 19 pandemic in 2020 in combination with a successful efficiency program reducing the company's cost base, as well as gross debt reduction. Archroma used its ample cash balance of $152 million (as of fiscal year end of September 2021) to voluntarily repay $90 million of its $105 million second-lien facility in November 2021 and will repay the remaining $15 million before end of 2021,” Moody’s said in a press release.

The agency said it forecasts Archroma's gross leverage to retreat towards 5.5x gross debt/EBITDA by the fiscal year ending September 2022 from 6.4x at the end of September 2021 and to cut its interest expense by about $8.5 million.

The outlook on both entities remains stable.

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