26 September 2004 15:40 [Source: ICIS news]
HOUSTON (CNI)--Standard & Poor's Ratings Services (S&P) has assigned its “B” rating to Huntsman LLC's (formerly Huntsman Corporation) proposed $715m (Euro581.3m) term loan facility due 2009.
The New York City-based commercial credit rating agency gave the facility a “3” recovery rating reflecting “the expectation for a meaningful (50-80%) recovery of principal in the event of default.”
S&P also assigned its “BB-“ rating to the privately-held chemical company's proposed $350m revolving credit facility with a recovery rating of “1”, indicating a "high expectation" of full recovery of principal in the event of default.
Proceeds from the new credit facilities will be used to refinance Salt Lake City, Utah-based Huntsman borrowings, S&P said.
Earlier this month, Huntsman announced a proposed IPO of stock saying “substantially all” of the proceeds from the proposed offering would be used to repay debt.
Standard & Poor's placed the new bank facility ratings on CreditWatch with positive implications. S&P also said that the corporate credit ratings for Huntsman LLC and its affiliates, HMP Equity Holdings Corporation, Huntsman International Holdings LLC and Huntsman Advanced Materials LLC, will remain on CreditWatch where they were placed 14 September with positive implications.
Added S&P: “The CreditWatch listing reflects the potential for an upgrade if the IPO is successfully completed and debt is significantly reduced. While the size of the offering would have to be substantial to warrant an upgrade in isolation, the potential for meaningful debt reduction taken together with the emerging trend of operating improvement, may support an upgrade within the next several months.”
S&P said Huntsman's ratings will continue to reflect a highly aggressive financial profile and debt obligations at its subsidiaries that substantially elevate credit risk.
It added: “This capital structure heightens vulnerability to an economic downturn, rapid changes in raw-material prices and temporary oversupply conditions, despite good positions in a diverse range of product offerings and an average business profile”
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