Moody's lowers Chemtura on maturing debt, weak demand

05 February 2009 21:17  [Source: ICIS news]

HOUSTON (ICIS news)--Moody's Investors Services lowered on Thursday its ratings for Chemtura due to maturing debt at a time of weak demand for the company's products.

An upcoming $370m (€289m) debt maturity becomes due in early July 2009, Moody's said. This is a "significant concern in a time of challenging capital market conditions", the firm said.

To repay the July maturity in time, Chemtura will likely need to sell at least one of its businesses, Moody's said.

Such a sale could pose its own problems, according to Moody's. Whatever is left of Chemtura could be downgraded again.

While Chemtura contends with repayment deadlines, it is also struggling in an economic downturn.

Orders have dropped as Chemtura's customers either experience or anticipate reduced demand, Moody's said.

The Chemtura segments hardest hit by weakening demand are the company's polymer additives and performance specialities units, Moody's said. These segments sell material used in electronics, polyolefins, construction and industry.

If Chemtura's operating profits fall too steeply, it might not comply with the covenants of its existing bank facility, Moody's said. Already, Chemtura has received waivers under its existing bank facility.

Chemtura has taken some steps to lower costs and increase liquidity, Moody's said.

In 2008, Chemtura announced a five-point plan intended to reduce inventories and capital expenditures. Chemtura may also sell-off assets and reduce capacity under the plan.

Already, Chemtura has suspended its dividend.

Nonetheless, Moody's lowered Chemtura's corporate family rating to B3 from B2. The probability-of-default rating was lowered to Caa1 from B2.

Other ratings that fell to B3 from B2 include senior notes, $500m due 2016; senior unsecured notes, $150m due 2026; and senior unsecured notes, $370m due 2009, Moody's said.

Moody's could lower Chemtura's ratings again, it said.

Shares of Chemtura traded at 45 cents as of 15:46 hours New York time (20:46 GMT), down 5 cents.

($1 = €0.78)

For more on Chemtura visit ICIS company intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Al Greenwood
+1 713 525 2645

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