Moody's gives specialties major Rhodia Baa1 issuer rating

27 April 2000 03:02  [Source: ICIS news]

SINGAPORE (CNI)--Moody's Investors Service of New York has assigned Baa1 senior unsecured issuer rating to French specialty chemical maker Rhodia SA, CNI was informed Thursday. This is the first time that Moody's has rated Rhodia's debt.

In a statement, Moody's said that its rating reflects Rhodia's leading market and technology positions in a number of products, but also recognises moderate revenue growth expectations and anticipates pricing and margin pressures in some of the company's more commodity-end business lines.

Also, Rhodia's finances will remain stretched following its Euro1.2bn ($1.1bn) acquisition of Albright and Wilson, the UK phosphate and surfactants maker, Moody's added.

Rhodia's product portfolio includes positions in surfactants, textile yarn, phosphate and phenol, as well as higher end lines such as polyamide-based industrial and micro-fibre operations, fine chemicals and industrial specialties.

Moody stated that it expects Rhodia to achieve substantial savings from ongoing cost-cutting programmes as well as planned rationalisation of supplier and purchasing relationships and restructuring of logistics and back-office functions. Rhodia's cost savings target is Euro470m, to be achieved by 2001.

Together with synergies through the integration of Albright & Wilson, Rhodia should be able to improve margins above the 15.3% in EBITDA (earnings before interest, tax, depreciation and amortisation) achieved in 1999, Moody's said.

Rhodia might also reduce debt levels through selective disposals of non-core assets, Moody's added.

Rhodia comprises the specialty chemicals, fibre and polymer business of Rhone Poulenc, from which it was spun off in 1998 through an initial public offering.

Rhodia Tuesday (25 April) was rated, also for the first time, by Standard & Poor's (S&P), the international ratings agency, receiving triple B-plus long-term and A-2 short-term corporate credit ratings.

By: Stefan Baumgarten
+1 713 525 2653

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