Research Update: Polymer Additives Holdings Inc. Downgraded To 'CCC' On Expected Weaker Earnings And Covenant Pressure; Outlook Negative

We anticipate that a global economic slowdown in 2020 will hurt demand and earnings at Polymer Additives Holdings Inc.'s (Valtris') specialty businesses. This compounds already weak 2019 operating figures that resulted from a weak benzoyl alcohol market and generally weaker demand. Additionally, in March 2020, the company fully drew on its revolver for additional cash on the balance sheet. We anticipate that given the weaker operating environment, the company will have trouble meeting its springing covenant as the year progresses. We are lowering our issuer credit rating on the company to 'CCC' from 'B-'. We are also lowering our issue-level ratings to 'CCC' from 'B-'. The negative outlook reflects risks that macroeconomic conditions could weaken more than we anticipate over

...- We anticipate that a global economic slowdown in 2020 will hurt demand and earnings at Polymer Additives Holdings Inc.'s (Valtris') specialty businesses. - This compounds already weak 2019 operating figures that resulted from a weak benzoyl alcohol market and generally weaker demand. - Additionally, in March 2020, the company fully drew on its revolver for additional cash on the balance sheet. We anticipate that given the weaker operating environment, the company will have trouble meeting its springing covenant as the year progresses. - We are lowering our issuer credit rating on the company to '###' from 'B-'. We are also lowering our issue-level ratings to '###' from 'B-'. - The negative outlook reflects risks that macroeconomic conditions could weaken more than we anticipate over the next 12 months and that there is increased risk related to servicing debt and operating needs....

Research Update