08 March 2013 13:20 [Source: ICIS news]
LONDON (ICIS)--Moody’s has upgraded France-based specialty chemicals company Arkema to Baa2 from Baa3 and its outlook to “positive” from “neutral”, the ratings agency said on Friday.
According to Moody’s, the decision was taken as a result of the company’s restructuring measures, the disposal of more volatile activities, and complementary acquisitions of several high-value businesses in 2011 and 2012.
The restructuring improvements and integration measures led to a strong 2012 performance in line with Baa2-rated chemical industry peers, Moody’s added.
Moody’s said that the rating is based on the assumption that the company will achieve two-thirds of its targeted sales growth to 2016 through ongoing investment, expected to begin contributing to earnings from 2014 onwards.
The Klesch Group’s recent call for compensation over alleged information omissions in Arkema’s sale of vinyl business Kem One has the potential to impact on the rating, but Moody’s added that it expects Arkema to be able to cope with the challenge.
Moody’s said: “The recently announced legal challenge to Arkema by the Klesch Group, the new owner of the assets, may result in contingent claims or credit losses on Arkema's contracts with Kem One.
“While the developing dispute is a credit negative, the Baa2 rating reflects Moody's expectation that Arkema will manage the developing situation with a view to protecting its financial profile,” the agency added.
The upgrade comes the same week as investment bank JP Morgan Cazenove’s decision to downgrade its rating for the company to “neutral” from “overweight”, on the expectation that Arkema’s end markets are likely to remain soft in the near future.
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