Moody's assigns B2 to Heubach

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Luxembourg Investment Co. 428 Sarl (Heubach Group). Concurrently, Moody's gave B2 ratings to Heubach Group's proposed senior secured debt instruments, comprising a CHF 560 million equivalent, dollar-denominated term loan and a $125 million revolving credit facility.

Luxembourg Investment is the designated private equity-sponsored vehicle combining Clariant AG's pigments business with German pigments producer Heubach GmbH. The agency said it assigned the ratings to this entity on account of its role as holding company for the combined operations and as the entity that will issue the annual audited consolidated financial statements.

The rating reflects Heubach’s position as the second largest global player in the colorant solutions market, underpinned by its global reach and proximity to customers, its good product, end-market and geographic diversification and long-standing customer relationships with a low degree of customer concentration, Moody’s said. Huebach also has relatively moderate leverage for an equity-sponsored transaction.

“Despite the moderate leverage and expected deleveraging, Moody's has positioned the rating at B2 to reflect (i) the exposure to cyclical and competitive end-markets; still fragmented global market structure with consolidation only having started to take place; (ii) production concentration at the main site in Hoechst, Germany, with the associated financial risk related to a strengthening of the euro; (iii) the absence of a track record of the combined entity and the falling profitability of the legacy operations in recent years, due to limited ability to pass on raw material cost increases; and (iv) relatively low EBITDA margins in the low teens in percentage terms compared to other chemical companies,” the agency said in a press release.

The outlook is stable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.