Moody’s mulls downgrading Tata Chemicals

01 February 2008 09:32  [Source: ICIS news]

MUMBAI (ICIS news)-- Moody’s Investors Service placed India’s Tata Chemicals under review for a possible downgrade following the company's plan to acquire US-based soda ash producer General Chemical Industrial Products (GCIP) for approximately $1bn, it said on Friday.

"The rating action reflects uncertainties associated with the funding structure and the impact the acquisition will have on Tata Chemicals' consolidated financial profile," said Moody's senior vice president Terry Fanous.

Going forward, the soda ash producer would face integration challenges, given the size and operating profile of GCIP, he added.

However, the acquisition would yield incremental benefits to Tata Chemicals in becoming one of the world's largest producers of soda ash, Moody's said.

The brokerage currently has a "Baa3" foreign currency issuer rating on the company.

Moody's review would focus on the funding structure of the transaction, the resulting financial and operating profile and potential integration challenges, it said.

It would also review the group's financial strategy, capital expenditure requirement, debt structure and ranking of creditors within the consolidated entity.

"At the same time, the review will consider Tata Chemicals' strengthened industry position arising from this acquisition," Moody’s said.

Tata Chemicals’ shares were trading 3.28% down at rupees (Rs) 295 ($7.5) at on the Bombay Stock Exchange at 08:10 GMT.

($1 = Rs39.27)


By: Aaron Rodrigues
+65 6780 4359

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