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21 Sep 2004
CORRECTION TO HEADLINE: MOODY'S ASSIGNS Caa2 RATING TO CRYSTAL US HOLDINGS 3 LLC'S SR. DISC. NOTES; OUTLOOK STABLE (DELETED REFERENCE TO NALCO)
Approximately $500 Million of Long-Term Debt Affected
New York, September 21, 2004 -- Moody's Investors Service assigned a Caa2 rating to Crystal US Holdings
3 LLC's (CUSHLLC) new senior discount notes. Moody's also affirmed
the ratings of BCP Caylux Holdings Luxembourg S.C.A.
(BCP) and CNA Holdings Inc. Additionally, Moody's assigned
a senior implied rating of B1 and an issuer rating of Caa2 to CUSHLLC.
The ratings outlook is stable. The issuance of the notes effectively
removes the vast majority of equity that was initially used to capitalize
BCP and fund the acquisition of Celanese AG. CUSHLLC is a subsidiary
of Blackstone Crystal Holdings Capital Partners (Cayman) IV Ltd.,
an affiliate of The Blackstone Group.
The following summarizes the ratings activity:
Crystal US Holdings 3 LLC's / Crystal US Sub 3 Corp.
Senior discount notes, $513 million due 2014 ($500
million current value) - Caa2
Senior Implied - B1
Senior Unsecured Issuer Rating -- Caa2
BCP Caylux Holdings Luxembourg S.C.A.
Guaranteed senior secured revolver, 313 million Euros ($380
million) due 2009 -- Ba3
Guaranteed senior secured credit-linked revolving facility,
187 million Euros ($228 million) due 2009 - Ba3
Guaranteed senior secured term loan B, 500 million Euros ($608
million) due 2011 - Ba3
Guaranteed senior secured term loan C, 350 million Euros ($424
million) due 2011 - B2
Guaranteed senior subordinated notes, 1,244 million Euros
($1,465 million) of US dollar and Euro denominated notes
due 2014 - B3
CNA Holdings Inc
Senior unsecured - B1
BCP Caylux Holdings Luxembourg S.C.A.
Senior Implied - B1
Senior Unsecured Issuer Rating -- B2
The Caa2 rating of the new senior discount notes reflects their structural
subordination to a substantial level of debt at BCP, the principal
subsidiary. Additionally, BCP has the ability to add over
$500 million of additional debt that would be structurally senior
to the notes at CUSHLLC. The new notes are not guaranteed and interest
will become cash-pay five years after the date of issuance.
CUSHLLC has no operating assets and is solely reliant on cash distributions
from BCP to make cash interest payments beginning in September 2009.
The bonds issued by BCP contain covenants that will limit distributions
from BCP to CUSHLLC. These covenants include a standard restricted
payments test and a minimum of two times interest coverage. However,
the indentures allow for up to $50 million of distributions that
are not subject to the aforementioned covenants. Moody's can not
be certain that BCP will have sufficient room under these covenants to
pay the interest on the notes or the principle when due.
The stable outlook reflects the improving operating performance at Celanese
AG, as well as the expectation that earnings and free cash flow
will increase significantly in 2005 due to growth in their specialty products
and a tighter supply/demand balance in acetyls. This positive earnings
outlook is tempered by the expectation that BCP's debt will increase by
year-end due to a 380 million pension contribution,
uncertainty over the cash required to buyout minority shareholders at
Celanese AG, the ability of BCP to increase the size of its secured
term loan by an additional $175 million, and Moody's prior
recognition that significant latitude within BCP's bond indentures could
allow the company to issue additional indebtedness. The downgrade
of BCP in late June reflected Blackstone's willingness to add additional
cash-pay debt, as well as the anticipation that they might
utilize the latitude that exists in its bond indenture.
The affirmation of the ratings of BCP and CNA Holdings Inc reflects that
even with the increase in HoldCo debt pro forma debt to EBITDA,
adjusted for future cash pension payments of 380 and minority shareholder
payment of over 400 million, is just under 6 times for the
LTM ended June 30, 2004 (pro forma EBITDA of 470 million).
Moody's anticipates that this ratio will decline to less than 5 times
by the end of 2005 and that free cash flow (cash from operations less
capital expenditures) to total debt will increase to at least 4.5%.
The ratings could be lowered if the company fails to achieve yearly free
cash flow of at least $100 million (excluding extraordinary items
and restructuring costs), or if financial performance is significantly
weaker than anticipated. A quick completion of the conversion to
a US domiciled entity, a faster expansion of operating margins,
and increases in cost savings are potential upsides to the credit,
but they are unlikely to cause a positive change in the outlook or rating
over the next two years due to the increase in debt from this note issue.
BCP Caylux Holdings Luxembourg S.C.A. is the majority
owner of Celanese AG and a subsidiary of Crystal US Holdings 3 LLC.
Crystal US Holdings 3 LLC is a subsidiary of Blackstone Crystal Holdings
Capital Partners(Cayman) IV Ltd., an affiliate of The Blackstone
Celanese AG, headquartered in Germany, is a leading global
producer of acetyls, emulsions (including vinyl acetate monomer),
acetate tow and engineered thermoplastics. CNA Holdings Inc.
is the holding company that contains Celanese's North American operating
companies. Celanese reported sales of 4.1 billion
Senior Vice President
Corporate Finance Group
Moody's Investors Service
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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