Research Update: Innovative Water Care Global Corp. Rated 'B', Stable Outlook Post Carve-Out From Lonza Group; Financial Sponsor Owned

Georgia-based pool chemicals manufacturer Innovative Water Care Global Corp. (IWC) is being carved out from Europe-based Lonza Group Ltd. and acquired by financial sponsors Platinum Equity LLC (not rated). We estimate pro forma debt to EBITDA above 6.5x post the completion of transaction, which will likely improve closer to mid-5.0x over the next 12 months driven by a material improvement in EBITDA from newly contracted business and lower operating expenses. On Feb. 4, 2019, we assigned a 'B' issuer credit rating and stable outlook to IWC. At the same time, we assigned a 'B' issue-level rating with a '3' recovery rating to the company's proposed $350 million first-lien term loan maturing 2026, and a 'B-' issue-level rating with a '5'

...+ Georgia-based pool chemicals manufacturer Innovative Water Care Global Corp. (IWC) is being carved out from Europe-based Lonza Group Ltd. and acquired by financial sponsors Platinum Equity LLC (not rated). + We estimate pro forma debt to EBITDA above 6.5x post the completion of transaction, which will likely improve closer to mid-5.0x over the next 12 months driven by a material improvement in EBITDA from newly contracted business and lower operating expenses. + On Feb. 4, 2019, we assigned a 'B' issuer credit rating and stable outlook to IWC. At the same time, we assigned a 'B' issue-level rating with a '3' recovery rating to the company's proposed $350 million first-lien term loan maturing 2026, and a 'B-' issue-level rating with a '5' recovery rating to the company's proposed $100 million second-lien term loan maturing 2027. + The stable outlook reflects our expectation that there will be significant growth in EBITDA from a combination of lower administrative costs as a stand-alone...

Research Update