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Doppio downgrade di Moody's e di S&P su Cognis. La contrazione dell'EBITDA si traduce in un deterioramento della metrica finanziaria, con l'indebolimento dei parametri riguardanti la tutela dei creditori: il leverage a marzo 2009 (valutato sui 12 mesi) è stimato da Moody's a 9x, mentre l'EBITDA/interest (sempre sulla stessa base cronologica) si riduce a 1,2x.
Nei sei mesi a venire, l'agenzia si attende un ulteriore peggioramento dei parametri indicati ed è critica anche verso la decisione di Cognis di riacquistare sul mercato debito PIK anziché estinguere debito senior: l'operazione consente di realizzare un profitto superiore, ma ha ridotta efficacia sui rating.
In un contesto problematico, resta la considerazione per cui presumibilmente il bottom del ciclo produttivo per Cognis dovrebbe essere stato fatto appunto nel Q1/2009 e successivamente la società dovrebbe potersi giovare di una ripresa degli ordini e di una riduzione dei costi di materie prime, sebbene la recente ripresa dei corsi di alcuni petrolchimici rischi di comprimere la capacità di generazione di cash flow nel secondo semestre 2009 e in parte del 2010.
Gioca invece un ruolo favorevole nel sostenere il rating la forte posizione di liquidità disponibile presso Cognis al 31/03/2009; in prospettiva, la capacità di controllare la struttura dei costi ed il consumo di cash, così da evitare un accrescimento dei livelli di debito e da conservare la posizione di liquidità disponibile saranno centrali nella valutazione del rating.
Moody's downgrades Cognis to B3. Outlook stable.
Frankfurt, June 17, 2009 -- Moody's Investors Services has today downgraded the probability of default and corporate family ratings of Cognis GmbH to B3 from B2. The outlook is stable.
The downgrade was prompted by a deterioration of the credit profile of Cognis GmbH over the last twelve months to 31st March 2009 with Debt / EBITDA estimated by Moody's to have reached a level of around 9.0x and EBITDA / Interest to have dropped to approximately 1.2x on an LTM Q1 2009 basis (6.0x and 2.2x respectively at 31st December 2007), metrics which are not commensurate with our B2 rating category anymore.
The deterioration in the credit profile of Cognis was linked to a weakening operating performance on the back of difficult market conditions in Q4 2008 and Q1 2009.
The agency also notes that Cognis GmbH has used approximately 20% of the EUR 127million proceeds (as of 31st March 2009) from the sale of Oleochemicals and Pulcra Chemicals to buyback PIKs in open market transactions thereby upstreaming cash outside of the rated group rather than repay senior debt which would have helped stabilize the credit profile of the rated group.
Moody's expects debt and cash flow metrics to further deteriorate over the next six months at least as Cognis will face challenging comparatives from previous year while the issuer should be able to improve operating performance and cash flow generation on a sequential basis from a likely bottom reached in Q1 2009 helped by slightly improved demand patterns and lower raw material costs as all legacy raw materials will have flown through the supply chain.
Medium term, Moody's flags that both lauric oil and some of the petrochemicals prices have risen sharply since bottoming out in the first quarter of the year, which might pressure the cash flow generation of the group through higher working capital requirements in the second half of the year and into fiscal year 2010.
The rating of Cognis remains strongly supported by the group's sound liquidity profile, the relative defensiveness of its business portfolio with a clear focus on consumer and health & nutrition chemicals and the management's efforts to align the group's cost base to a weaker operating environment.
The stable outlook assigned to the ratings reflects the agency's expectation that Cognis should be able to stabilize its operating performance on a sequential basis supported by easing destocking patterns throughout the chemicals value chain and its end-industries.
The agency also expects Cognis to continue focusing on adjusting its cost base and managing its cash outflows for working capital and capital expenditures in order to avoid a build up in debt and to protect its strong liquidity position.
Moody's will continue to closely monitor the operating performance of Cognis in the short term. Failure to stabilize the operating performance of the group and to control cash consumption in order to maintain stable debt levels and a strong liquidity position would lead to further negative pressure on the ratings.
The agency will also closely survey the group's ability to cover cash interest expense from reported funds from operations as an indicator of the group's ability to service its debt. Failure to maintain reported FFO / Cash Interest expense sustainably above 2.0x would lead to negative rating pressure.
The liquidity position of Cognis is strong. The issuer had EUR 241million of cash & cash equivalents on balance sheet at 31st March 2009 and access to a largely undrawn EUR 250million revolver (EUR 219million undrawn at 31st March 2009).
In addition Cognis faces no major maturities over the next twelve months and benefits from very substantial headroom under its financial covenant.
While Moody's expects that operating cash flows might not cover all capex and working capital requirements over the next twelve months as demand levels remain subdued and recent increases in raw material prices will make it difficult for Cognis to extract further cash inflows from working capital during the second half of the year, we remain confident that the group's focus on reducing costs and controlling free cash flow generation should help the issuer protecting its cash and liquidity position during this period of difficult market conditions.
The following ratings of Cognis GmbH were affected by today's action:
- Corporate Family Rating downgraded to B3;
- Probability of Default Rating downgraded to B3;
- Senior secured 2014 notes downgraded to Caa2 / LGD 5
- Senior secured floating rate notes and loans due 2013 downgraded to B2 / LGD3
- Revolving credit facility downgraded to Ba3 / LGD1
Moody's does not rate senior PIK notes at Cognis Holding GmbH.
The last rating action was on 13 June 2008, when the outlook on Cognis GmbH was changed to negative from stable.
...
Cognis GmbH, headquartered in Monheim, Germany, is a global specialty chemicals producer with leading market positions in natural-oil based chemicals. Cognis reported revenues of EUR3,001 million and a recurring EBITDA of EUR351 million for the fiscal year ended 31st December 2008
Nei sei mesi a venire, l'agenzia si attende un ulteriore peggioramento dei parametri indicati ed è critica anche verso la decisione di Cognis di riacquistare sul mercato debito PIK anziché estinguere debito senior: l'operazione consente di realizzare un profitto superiore, ma ha ridotta efficacia sui rating.
In un contesto problematico, resta la considerazione per cui presumibilmente il bottom del ciclo produttivo per Cognis dovrebbe essere stato fatto appunto nel Q1/2009 e successivamente la società dovrebbe potersi giovare di una ripresa degli ordini e di una riduzione dei costi di materie prime, sebbene la recente ripresa dei corsi di alcuni petrolchimici rischi di comprimere la capacità di generazione di cash flow nel secondo semestre 2009 e in parte del 2010.
Gioca invece un ruolo favorevole nel sostenere il rating la forte posizione di liquidità disponibile presso Cognis al 31/03/2009; in prospettiva, la capacità di controllare la struttura dei costi ed il consumo di cash, così da evitare un accrescimento dei livelli di debito e da conservare la posizione di liquidità disponibile saranno centrali nella valutazione del rating.
Moody's downgrades Cognis to B3. Outlook stable.
Frankfurt, June 17, 2009 -- Moody's Investors Services has today downgraded the probability of default and corporate family ratings of Cognis GmbH to B3 from B2. The outlook is stable.
The downgrade was prompted by a deterioration of the credit profile of Cognis GmbH over the last twelve months to 31st March 2009 with Debt / EBITDA estimated by Moody's to have reached a level of around 9.0x and EBITDA / Interest to have dropped to approximately 1.2x on an LTM Q1 2009 basis (6.0x and 2.2x respectively at 31st December 2007), metrics which are not commensurate with our B2 rating category anymore.
The deterioration in the credit profile of Cognis was linked to a weakening operating performance on the back of difficult market conditions in Q4 2008 and Q1 2009.
The agency also notes that Cognis GmbH has used approximately 20% of the EUR 127million proceeds (as of 31st March 2009) from the sale of Oleochemicals and Pulcra Chemicals to buyback PIKs in open market transactions thereby upstreaming cash outside of the rated group rather than repay senior debt which would have helped stabilize the credit profile of the rated group.
Moody's expects debt and cash flow metrics to further deteriorate over the next six months at least as Cognis will face challenging comparatives from previous year while the issuer should be able to improve operating performance and cash flow generation on a sequential basis from a likely bottom reached in Q1 2009 helped by slightly improved demand patterns and lower raw material costs as all legacy raw materials will have flown through the supply chain.
Medium term, Moody's flags that both lauric oil and some of the petrochemicals prices have risen sharply since bottoming out in the first quarter of the year, which might pressure the cash flow generation of the group through higher working capital requirements in the second half of the year and into fiscal year 2010.
The rating of Cognis remains strongly supported by the group's sound liquidity profile, the relative defensiveness of its business portfolio with a clear focus on consumer and health & nutrition chemicals and the management's efforts to align the group's cost base to a weaker operating environment.
The stable outlook assigned to the ratings reflects the agency's expectation that Cognis should be able to stabilize its operating performance on a sequential basis supported by easing destocking patterns throughout the chemicals value chain and its end-industries.
The agency also expects Cognis to continue focusing on adjusting its cost base and managing its cash outflows for working capital and capital expenditures in order to avoid a build up in debt and to protect its strong liquidity position.
Moody's will continue to closely monitor the operating performance of Cognis in the short term. Failure to stabilize the operating performance of the group and to control cash consumption in order to maintain stable debt levels and a strong liquidity position would lead to further negative pressure on the ratings.
The agency will also closely survey the group's ability to cover cash interest expense from reported funds from operations as an indicator of the group's ability to service its debt. Failure to maintain reported FFO / Cash Interest expense sustainably above 2.0x would lead to negative rating pressure.
The liquidity position of Cognis is strong. The issuer had EUR 241million of cash & cash equivalents on balance sheet at 31st March 2009 and access to a largely undrawn EUR 250million revolver (EUR 219million undrawn at 31st March 2009).
In addition Cognis faces no major maturities over the next twelve months and benefits from very substantial headroom under its financial covenant.
While Moody's expects that operating cash flows might not cover all capex and working capital requirements over the next twelve months as demand levels remain subdued and recent increases in raw material prices will make it difficult for Cognis to extract further cash inflows from working capital during the second half of the year, we remain confident that the group's focus on reducing costs and controlling free cash flow generation should help the issuer protecting its cash and liquidity position during this period of difficult market conditions.
The following ratings of Cognis GmbH were affected by today's action:
- Corporate Family Rating downgraded to B3;
- Probability of Default Rating downgraded to B3;
- Senior secured 2014 notes downgraded to Caa2 / LGD 5
- Senior secured floating rate notes and loans due 2013 downgraded to B2 / LGD3
- Revolving credit facility downgraded to Ba3 / LGD1
Moody's does not rate senior PIK notes at Cognis Holding GmbH.
The last rating action was on 13 June 2008, when the outlook on Cognis GmbH was changed to negative from stable.
...
Cognis GmbH, headquartered in Monheim, Germany, is a global specialty chemicals producer with leading market positions in natural-oil based chemicals. Cognis reported revenues of EUR3,001 million and a recurring EBITDA of EUR351 million for the fiscal year ended 31st December 2008
