Moody’s raises Momentive's ratings on merger with Hexion

16 September 2010 19:06  [Source: ICIS news]

TORONTO (ICIS)--Moody’s has raised its corporate family rating for Momentive Performance Materials following news of the company's planned merger with Hexion Specialty Chemicals, the US credit rating agency said on Thursday.

Hexion and Momentive - both controlled by private equity firm Apollo Managment - said earlier this week they planned to merge to form a $7.5bn (€5.8bn) producer of specialty chemicals and materials.

Moody's raised the rating to B3, from Caa1, it said. The agency also raised Momentive’s speculative grade liquidity rating by one notch to SGL-2, from SGL-3, it added.

“While the merger is expected to have a moderate positive financial impact on both companies, the upgrade is primarily driven by improved financial performance at Momentive over the past year along with the additional financial flexibility that will likely be available to Momentive as part of a larger, more diversified company,” Moody’s said.

The merger should provide Momentive with more options in refinancing its debt, Moody’s added.

Both Momentive and Hexion had heavy debt loads that would require refinancing of over $4.5bn by around 2013-2015, the agency said.

Albany, New York-based Momentive is described as the second largest producer of silicones and silicone derivatives worldwide. The company has two divisions: silicones, which account for about 90% of revenues, and quartz.

Momentive revenues were roughly $2.4bn for the 12 months ended 30 June, according to Moody’s.

Momentive was formed in 2006 when Apollo acquired the General Electric’s Advance Materials (GEAM) business.

($1 = €0.77)

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By: Stefan Baumgarten
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