Moody's upgrades ICI's credit ratings outlook to stable

31 January 2002 17:43  [Source: ICIS news]

LONDON (CNI)--Moody's on Thursday changed its outlook for ICI from negative to stable on the news that the UK specialty chemicals company plans to reduce debt by selling its Synetix catalyst business and raise £800m ($1.13bn/Euro1.30bn) through a rights issue.

The international credit ratings agency said the plans announced earlier today by ICI will lead to a substantial reduction in the company's debt in 2002.

"Given the cash generation we expect from ICI, this should result in retained cashflow/debt climbing back to the high teens, which would support the current Baa2 ratings and stable outlook," Moody's stated.

The ratings continue to reflect ICI's broad customer base, business portfolio and geographic spread, plus the fact that the company's more stable-margined consumer-end businesses account for about 70% of its portfolio, the agency said.

It added that ICI has nearly completed a reconfiguration of its portfolio, which is expected to result in a decline in cash restructuring and legacy charges from next year onwards.

Moody's noted, however, that 2002 will be a challenging year for the chemicals industry and this is expected to negatively impact cashflow generation for most companies in the industry, including ICI.

The agency expects ICI to sell Synetix "some time over the next 12 months".

By: Anna Jagger
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