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Rating Action:

Moody's assigns B3 Corporate Family Rating to Diamond (BC) B.V.; Outlook stable

Global Credit Research - 11 Jul 2017

Approximately $2.65 billion of rated debt affected

New York, July 11, 2017 -- Moody's Investors Service ("Moody's") assigned first time ratings to Diamond (BC) B.V. ("Diversey"), including a B3 corporate family rating and a B3-PD probability of default rating. Instrument ratings are detailed below. The rating outlook is stable. The proceeds from the new facilities will be used to finance the acquisition of Diversey by Bain Capital Investors, as well as pay fees and expenses associated with the transaction.

The purchase price is supported by an undisclosed equity investment by Bain Capital Investors. The equity investment is pure common stock and not expected to have a dividend, PIK or accrete. The transaction is expected to close in July.

Moody's took the following actions:

Assignments:

..Issuer: Diamond (BC) B.V.

.... Probability of Default Rating, Assigned B3-PD

.... Corporate Family Rating, Assigned B3

....Senior Secured Bank Credit Facility, Assigned B1 (LGD 3)

....Senior Unsecured Notes, Assigned Caa2 (LGD 5)

Outlook Actions:

..Issuer: Diamond (BC) B.V.

....Outlook, Assigned Stable

The ratings are subject to the receipt and review of the final documentation.

RATINGS RATIONALE

Diversey's B3 corporate family rating reflects high pro forma leverage, the fragmented and competitive market and exposure to cyclical end markets. Pro forma for the carve-out from Sealed Air Corporation, Diversey's leverage is high for the rating category and the company will need to achieve significant cost savings to improve it materially. The industrial cleaning and hygiene solutions industry is a fragmented and competitive market and the majority of market share is held by many private, unrated regional and niche competitors. The company also has exposure to cyclical end markets with approximately 11% of sales generated in retail end markets and 13% generated in hospitality. Diversey is also expected to remain financially aggressive, focusing mainly on small tuck-in acquisitions.

The rating is supported by the company's exposure to stable and faster growing end markets, industry leading position and low customer concentration. The rating is also supported Diversey's long-standing customer relationships and global footprint. Approximately 24% of sales are generated in food and beverage end markets and 10% in healthcare. Additionally, Diversey generates approximately one-third of its sales from emerging markets and approximately 75% outside the US overall. The company also has long-standing customer relationships with a low customer concentration of sales (the top ten account for approximately 13% of revenue and no single customer accounts for more than 3%). Diversey is also expected to maintain adequate liquidity.

The ratings could be upgraded if the company sustainably improves credit metrics within the context of a stable operating and competitive environment while also maintaining adequate liquidity. Diversey would also need to sustainably generate meaningful free cash flow. Specifically, the ratings could be upgraded if debt/EBITDA declines below 6.0 times, EBITDA to interest expense increases above 3.0 times and funds from operations to debt increases above 6.0%.

The ratings could be downgraded if credit metrics, the operating and competitive environment, and/or liquidity deteriorates and the company undertakes a large debt-financed acquisition. The ratings could also be downgraded if the company fails to execute on its operating plan. Specifically, the ratings could be downgraded if debt/EBITDA remains above 6.0 times, EBITDA to interest expense declines below 2.0 times and funds from operations to debt remains below 6.0%.

The stable outlook reflects the expectation that Diversey will benefit from productivity initiatives, cost cutting and the dedication of free cash flow to debt reduction.

The principal methodology used in these ratings was Global Chemical Industry Rating Methodology published in December 2013. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Headquartered in Charlotte, North Carolina, Diversey is a global supplier of cleaning, hygiene, sanitizing products, equipment and related services to the institutional and industrial cleaning and sanitation markets. The business is organized into two segments, Professional (76% of 2016 revenue) and Food & Beverage (24% of 2016 revenue). The company generated approximately $2.6 billion of sales in 2016. Diversey will be a portfolio company of Bain Capital Investors.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Edward Schmidt
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Brian Oak
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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