Moody’s lowers Armacell loans

Moody's Investors Service said it affirmed the B3 corporate family rating and B3-PD probability of default rating of Armacell Holdco Luxembourg Sarl.

Moody's also said it downgraded the rating on the company’s €622 million senior secured first-lien term loan B3 due in 2023 to B3 from B2, along with the rating on its €100 million senior secured revolving credit facility due to 2022 issue by Armacell Bidco Luxembourg Sarl to B3 from B2.

The outlook was changed to stable from positive and the outlook on Armacell Bidco Luxembourg is stable.

The outlook revision reflects the group's mixed 2018 operating performance that led to a significant deterioration of Armacell's credit metrics also due to the heavy investment program pursued by the company in 2018, Moody’s explained.

Armacell's operating performance in 2018 was affected by negative foreign-currency, higher raw material prices, increased freight costs and additional expenses related primarily to the group's restructuring and footprint activities, the agency said.

Armacell posted solid first quarter 2019 results, and Moody's said it continues to anticipate an improvement in the company's operating performance over the next year, driven by strong price increases and return on high investments made in 2018.

The stable outlook reflects an expectation that Armacell will maintain its sound profitability and gradually reduce its adjusted gross leverage to lower than 7x, Moody’s said.

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