Lion Copolymer Holdings LLC Assigned #B# Corporate Credit Outlook New Debt Rated #B+#

Stocks and Financial Services Press Releases Tuesday September 12, 2017 09:10
NEW YORK--12 Sep--S&P Global Ratings
NEW YORK (S&P Global Ratings) Sept. 11, 2017--S&P Global Ratings today assigned its 'B' corporate credit rating to Lion Copolymer Holdings LLC. The outlook is stable.

At the same time, we assigned our 'B+' issue-level rating to Lion Copolymer's $215 million term loan. The recovery rating on this facility is '2', indicating our expectation for substantial (70%-90%; rounded estimate: 80%) recovery in the event of payment default. The borrower on the credit facilities is Lion Copolymers Holdings LLC.

All ratings are based on preliminary terms and conditions.

The 'B' corporate credit rating on the company reflects our view of its site concentration, narrow product portfolio, and earnings volatility, as well as our expectation that Lion Copolymer will maintain its credit metrics, modest capital expenditures, and mid- to high-teens EBITDA margins. We also expect the company to continue to generate positive free cash flow.

The stable outlook reflects our expectation that Lion Copolymers will maintain operational performance levels commensurate with pro forma weighted-average FFO to debt of above 20%. We expect Lion to benefit from a favorable competitive landscape because anti-dumping tariffs were introduced for non-U.S. SBR producers in August. Our base case scenario assumes that management will remain committed to maintaining prudent debt leverage, and thus, we have not assumed any increases in debt to fund dividends or acquisitions. However, we note the potential that if attractive acquisition opportunities were to become available, the company could stretch its balance sheet to fund them.

We could lower our ratings on Lion Copolymers in the event that feedstock issues constrain Lion's production such that FFO to debt falls below 20% over several quarters, which could happen if margins or revenues decline by 200 basis points. We could also consider a downgrade if liquidity significantly weakens to a level whereby sources are less than 1.2x uses, or if, contrary to our expectation, the company completes a large debt-funded acquisition or dividend recapitalization.

Over the next 12 months, we could raise the ratings by one notch if operating performance exceeds our expectations such that FFO to debt exceeds 30% for a prolonged period. This could occur if growth in the company's higher-margin "hot" SBR segment outpaces our expectations or if end markets like roofing or replacement tires outperform our current projections.


Latest Press Release

The effects of a hard Brexit will be decisive for the innovation capacity and competitiveness of the British automotive industry

After an exceptional peak in production of vehicles recorded in mid-2016 (1.02 million unit sales, up 8.5% for the January-August period compared to the same period in 2015), 2017 saw a drop in production of nearly 2%. The healthy dynamic of exports in...

Photo Release: KBank promotes K PLUS SHOP in Chiang Mai during high tourism season

Recently, KASIKORNBANK (KBank) introduced the "ปิ๊บจังออนทัวร์" campaign and started to promote the K PLUS SHOP service across Chiang Mai to allow for QR code payment via all Thai banks, as well as Alipay and WeChat Pay, during the high tourism season....

Photo Release: Bangkok Bank supports #Thailand e-Commerce Week 2017: Online Shall We GO! grab the opportunity because e-commerce is not waiting for anyone

Bangkok Bank Senior Executive Vice President Suteera Sripaibulya (3rd from Right) Executive Vice President Thantika Bodhisompon (2nd from Right) Senior Vice President of Metropolitan Business Banking Rachot Sektrakul (Left) and Vice President of Office...

Bangkok Bank supported ETDA organize Thailand e-Commerce Week 2017 to help Thai businesses enter the online market by offering financial products for businesses in the digital age

Bangkok Bank supported the Electronic Transactions Development Agency (Public Organization) (ETDA), Ministry of Digital Economy and Society,organized 'Thailand e-Commerce Week 2017' under the theme 'Online! Shall we GO...grab the opportunity because...

Photo Release: EXIM Thailand Inks MOU on Business Cooperation with Turk EXIM Bank

Mr. Pisit Serewiwattana (left), President of Export-Import Bank of Thailand (EXIM Thailand), and Mr. Adnan Yildirim (right), General Manager of Export Credit Bank of Turkey (Turk EXIM Bank) recently signed a memorandum of understanding on business...

Related Topics