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28 Oct 2004
MOODY'S AFFIRMS THE RATINGS OF CELANESE AND BCP (SENIOR IMPLIED AT B1) AND CHANGES OUTLOOK TO NEGATIVE AFTER ANNOUNCEMENT OF ACETEX ACQUISITION
Approximately $3.5 Billion of Long-Term Debt Affected
New York, October 28, 2004 -- Moody's Investors Service affirmed the ratings of BCP Caylux Holdings
Luxembourg S.C.A. (BCP), CNA Holdings Inc.
(CNA; a subsidiary of Celanese AG), and Crystal US Holdings
3 LLC's (CUSHLLC) following the announcement of the acquisition of Acetex
Corporation for roughly $525 million. However, Moody's
has changed the ratings outlook for these companies to negative.
Moody's also affirmed the ratings of Acetex Corporation's senior
unsecured debt at B2, as well as its stable outlook. These
actions reflect the assumptions that BCP will increase the size of its
securitized bank and term loan facilities to finance this acquisition;
and that Acetex's debt may remain outstanding given the current
price of the notes, even though BCP will be required to conduct
a "Change of Control" tender.
The following summarizes the ratings activity:
Ratings affirmed, outlook changed to negative:
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
Guaranteed senior unsecured notes, $265 million due 2009
Senior Implied* -- B2
Senior Unsecured Issuer Rating* -- B3
*: These ratings will be withdrawn upon the completion of the
The B1 senior implied rating of CUSHLLC reflects elevated total debt to
LTM EBITDA levels (6.2 times as of June 30, 2004 inclusive
of the Acetex transaction versus just under 6.0 times prior to
the acquisition), as well as the anticipation this credit metric
will meaningfully improve in 2005. The anticipated improvement
in 2005 metrics is due to the combination of changes to the general and
administrative expenses at Celanese, the start of a low cost methanol
supply agreement in 2005, and the improving supply/demand situation
in its businesses, including acetyls and key downstream markets:
VAM (vinyl acetate monomer) and PVOH (polyvinyl alcohol).
The negative outlook reflects the substantial increase in debt at the
combined entities, roughly $1.3 billion, relative
to initial financing plan for BCP, as well as the ability to add
additional debt to support further transactions. Furthermore,
the absence of a demonstrated improvement in both EBITDA and cash flow,
prior to pursuing additional transactions, raises Moody's
perception of credit risk. The outlook also reflects the expectation
that BCP's debt will increase by year-end (relative to June
30, 2004 debt levels) due to a $455 million pension contribution,
and that balance sheet cash will be largely used to buy-out minority
shareholders at Celanese AG. 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 indentures to add a significant amount of additional
The affirmation of the ratings of BCP and CNA Holdings Inc reflects that
even with the increase in debt related to the acquisition pro forma debt
to EBITDA on a proforma LTM basis is 6.2 times for the period ended
June 30, 2004 (pro forma EBITDA of $615 million: $50
million from Acetex and $565 million from Celanese). Third
quarter numbers have not been released for Celanese, but Acetex's
LTM EBITDA for the period ending September 30, 2004 rose to $60
million. The B1 senior implied rating assumes 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) will rise to $140-170
million. 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 and
could result in a return to a stable rating outlook in 2005.
Acetex is a low-cost European producer of acetyls, and a
North American producer (via its AT Plastics subsidiary) of ethylene vinyl
acetate copolymers and LDPE homo-polymers, for industrial
and consumer applications, and films, for the agricultural
and construction markets. Acetex's production facility in
France should improve Celanese's market position in Europe,
as Celanese shut down their German acetyls plant in 2000 and now imports
products from Singapore or the US. However, Acetex's acetic
acid unit can not be expanded easily, thereby placing a limit on
the plant's future output. In North America, Celanese's
can supply VAM to AT Plastic's plant in Edmonton, Alberta,
Canada at a lower cost than Acetex. These synergies plus improving
margins in Europe should boost 2005 EBITDA significantly above the LTM
pro forma level of $50 million. While these trends should
improve the credit metrics at Acetex over the near-term,
Moody's believes that the benefits are outweighed by its position
within a highly leveraged structure at BCP and concern over the financial
structure at Acetex subsequent to the "Change of Control"
tender. The ratings on Acetex's notes could be raise if credit
metrics at BCP improve to the levels cited in the paragraph above,
and the company's credit profile is not impaired by its actions
taken by BCP subsequent to the "Change of Control" tender.
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
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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