New M&A seen positive for Celanese US Holdings

18 December 2007 22:59  [Source: ICIS news]

HOUSTON (ICIS news)--A subsidiary of Celanese has sufficient cash flow to make bolt-on acquisitions without harming its newly upgraded debt rating, Standard & Poor’s Rating Services said on Tuesday.

S&P on Tuesday raised Celanese US Holdings' corporate credit rating to BB from BB- with a positive outlook to represent higher earnings and still favourable industry prospects that increase the likelihood of sustaining cash flow protection measures at improved levels in the future, S&P said.

“Moreover, increasing discretionary funds generation bolsters Celanese’s ability to address acquisitions and capital projects without harming the revised ratings," said Standard & Poor's credit analyst Wesley E Chinn.

The upgrade reflects the company's still-aggressive debt load, the cyclicality of the company’s businesses, and exposure of operating margins to oil and natural gas-based raw materials, S&P said.

A key factor offsetting these weaknesses is the company's investment-grade business risk profile as an integrated producer of diverse commodity and industrial chemicals. Another offset is the significant internal funds generation that enhances the flexibility to continue to make bolt-on acquisitions and capital investments and thus bolster earnings, S&P said.

The ratings agency pointed out the company’s exposure to cyclicality of a number of industries it serves. Celanese generates about 50% of consolidated earnings from its acetyls intermediates business, which consists primarily of products with commodity-like characteristics, S&P said.

Celanese’s expansion downstream lessens cyclicality compared with producers of mainstream commodity chemicals, S&P said.

Celanese has annual revenues of some $6.4bn (€4.4bn), and is one of the top global producers of diverse commodity and industrial chemicals.

($1.00=€0.69)

ICIS Copyright © Reed Business Information 2009

Author: John Waggoner
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