Fitch Ratings has revised the rating outlook on Mauritius-based SKI Carbon Black (Mauritius) Limited (Birla Carbon) to stable from positive, following its agreement to acquire Swiss Singapore Overseas Enterprises Pte Ltd (SSOE). At the same time, Fitch has affirmed Birla Carbon’s long-term foreign currency issuer default rating (IDR) at ‘BB.’
Birla Carbon is acquiring SSOE from the founding family of the Aditya Birla Group for $450 million, the majority of which will be debt-funded, thereby leading to higher leverage.
The stable outlook underscores Fitch’s expectation that leverage would rise temporarily but decline to below 3.5x by financial year ending March 2021 (FY21) — the level where Fitch would consider negative rating action.
Following the acquisition of SSOE, Fitch had amended its leverage sensitivities to adjust for readily marketable inventories (RMI), and tightened them to reflect Fitch’s view of a slightly weakened business profile.
Birla Carbon expects to complete the transaction in the next few weeks.
