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5 年内
TEXT-S&P affirms Huntsman Corp's 'BB-' ratings
2012年2月29日 / 晚上10点14分 / 5 年内

TEXT-S&P affirms Huntsman Corp's 'BB-' ratings

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Overview	
     -- Huntsman International LLC, a subsidiary of U.S.-based chemical maker 	
Huntsman Corp., plans to increase the amount of its revolving credit facility 	
to $400 million from $300 million and to extend the maturity of its revolving 	
credit facility and up to $652 million in term loans to 2017 from 2014.	
     -- We are affirming all of our ratings, including the 'BB-' corporate 	
credit rating, on Huntsman.	
     -- We are assigning a 'BB' issue-level rating and a recovery rating of 	
'2' to the company's revolver and term loan.	
     -- The positive outlook indicates the potential for a one-notch upgrade 	
during the next several quarters if the company can continue to strengthen 	
earnings and reduce debt, lifting funds from operations to debt above 20% from 	
about 17% currently.	
	
Rating Action	
On Feb. 29, 2012, Standard & Poor's Ratings Services affirmed its ratings, 	
including the 'BB-' corporate credit rating, on Salt Lake City-based Huntsman 	
Corp. and its subsidiary, Huntsman International LLC. The outlook is
positive.	
	
We have also assigned our 'BB' issue-level and '2' recovery rating to Huntsman 	
International LLC's proposed $400 million revolving credit facility due March 	
2017 and $652 million term loan B that it intends to extend to April 2017 from 	
2014. The '2' recovery rating indicates our expectation of a substantial (70% 	
to 90%) recovery in the event of a payment default.	
	
Rationale	
The ratings on Huntsman reflect our assessment of the company's business risk 	
profile as "satisfactory" and financial risk profile as "aggressive" (as our 	
criteria define the terms). Huntsman is a holding company with diverse 	
chemical operations that generated sales of more than $11 billion in 2011.	
	
We expect the company's financial policy to support improvement in its credit 	
quality and that its growth strategy will emphasize incremental capacity 	
expansion and bolt-on acquisitions as opposed to large, debt-financed 	
acquisitions that could weaken leverage metrics. We base our assumptions in 	
part on management's goal of reducing net (unadjusted) debt to EBITDA to less 	
than 2.5x compared with actual net leverage of 2.8x as of Dec. 31, 2011. We 	
adjust debt to include about $900 million of tax-adjusted underfunded 	
postretirement employee benefits, capitalized operating leases, and 	
environmental liabilities. The key ratio of funds from operations (FFO) to 	
total adjusted debt was 17% as of Dec. 31, 2011, consistent with our 	
expectations of 15% to 20% at the current rating.	
	
Despite a weak fourth quarter, which was negatively affected by customer 	
inventory destocking, raw material price spikes in some product categories, 	
and adverse exchange rate movements, Huntsman generated significantly higher 	
EBITDA in 2011 than 2010. We believe 2012 EBITDA generation should be similar, 	
with positive factors including its U.S. Gulf Coast raw material cost 	
advantage and restructuring benefits offsetting higher ore costs in the 	
titanium dioxide (TiO2) business. This assumes continued moderate global 	
economic growth. We also expect the company to continue to be able to pass on 	
increases in raw material costs, particularly for titanium ore and crude 	
oil-related inputs, albeit with a lag. Huntsman should continue to benefit 	
from its diversified global presence (nearly 70% of sales are outside the 	
U.S.), taking advantage of its presence in fast-growing regions such as Asia 	
(which accounts for about 25% of sales) and reducing expenditures in high-cost 	
locations such as Europe. Huntsman has maintained adequate liquidity levels 	
and gradually extended its debt maturity schedule through several 	
refinancings, including the current proposed revolver and term loan extensions.	
	
Through a strategic emphasis on increasing its performance chemicals business, 	
Huntsman has decreased its reliance on commodity products and positioned 	
itself among the largest differentiated chemical companies worldwide. However, 	
tight supply conditions and surging prices for one commodity--TiO2, a pigment 	
used in paints and plastics--has significantly increased the contribution of 	
Huntsman's pigments division during the past year. Its largest segment by 	
revenue is polyurethane chemicals, which constituted 39% of 2011 revenue and 	
34% of reported segment EBITDA. Key products include MDI (methylene diphenyl 	
diisocyanate) and its input propylene oxide, which Huntsman also produces. In 	
the polyurethane chemicals segment, Huntsman caters to end-market applications 	
such as insulation in consumer durable and nondurable products, as well as 	
construction, which exposes the company to trends in that industry. Other 	
segments include performance products (29% of revenue and 27% of EBITDA), 	
pigments (primarily TiO2; 14% of revenue and 36% of EBITDA), advanced 	
materials, (12% of revenue and 8% of EBITDA), and textile effects (6% of 	
revenue, but negative EBITDA). The company is restructuring the textile 	
effects business, which is suffering from currently weak demand for natural 	
fabrics and home textiles as well as the strong Swiss franc, and expects to 	
realize benefits in the second half of 2012.	
	
Liquidity	
Liquidity is "adequate" under our criteria, and we believe Huntsman has 	
sufficient sources of liquidity to cover its needs in the coming months even 	
if economic conditions deteriorate. As of Dec. 31, 2011, the company had $554 	
million in unrestricted cash and $481 million of unused borrowing capacity 	
under its $300 million revolving credit facility and two accounts receivable 	
securitization programs that mature in 2014.	
	
Our assessment of Huntsman's liquidity is based on the following expectations:	
     -- The company's sources of liquidity, including surplus cash and 	
committed credit availability, will exceed its uses by at least 1.2x despite 	
potential volatility in working capital requirements.	
     -- Cash flow generation should be adequate to cover expected capital 	
spending of $425 million, $85 million of pension funding in excess of expense, 	
and cash restructuring of $70 million in 2012. 	
     -- Debt maturities are manageable, in our opinion. The proposed 	
refinancing, if successful, together with the planned redemption of 	
approximately $83 million of senior subordinated euro notes due in 2015, would 	
significantly reduce the amount of debt due before 2016.	
     -- The company's EBITDA cushion under the senior secured leverage 	
covenant, currently about 50%, should remain comfortable.	
     -- Our rating analysis does not factor in sizable debt-financed 	
acquisitions or increases in shareholder rewards.	
	
Recovery analysis	
For the complete recovery analysis, see our recovery report on Huntsman to be 	
published later on RatingsDirect.	
	
Outlook	
The positive outlook reflects our expectation that Huntsman's earnings and 	
debt levels will remain relatively stable over the next 12 months, with some 	
potential for improvement thereafter if demand strengthens and the company can 	
maintain EBITDA margins above 10%. This assumes that Huntsman will be able to 	
pass on raw material cost increases to its customers in a timely fashion. We 	
could consider a modest upgrade in the next several quarters if FFO to total 	
debt exceeds 20% on a sustainable basis. We believe this could occur if 	
revenues increase 5% or more, EBITDA margins are 10% to 11%, and the company 	
reduces debt by a few hundred million dollars.	
	
On the other hand, we could revise the outlook to stable if it appears 	
unlikely that the company can achieve and sustain this slight improvement in 	
credit metrics. We could lower the ratings if there were a sharp economic 	
downturn that resulted in EBITDA margins in the high-single-digit percentage 	
area and sales contract by 10% or more with no prospects for immediate 	
improvement.	
	
Related Criteria And Research	
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 	
May 27, 2009	
     -- Key Credit Factors: Business And Financial Risks In The Commodity And 	
Specialty Chemical Industry, Nov. 20, 2008	
	
Ratings List	
	
Ratings Affirmed	
	
Huntsman Corp.	
 Corporate Credit Rating                      BB-/Positive/--    	
	
Huntsman International LLC	
 Corporate Credit Rating                      BB-/Positive/--    	
	
Huntsman International LLC	
 Senior Secured                               BB                 	
   Recovery Rating                            2                  	
 Senior Unsecured                             B+                 	
   Recovery Rating                            5                  	
 Subordinated                                 B                  	
   Recovery Rating                            6                  	
	
New Rating	
	
Huntsman International LLC	
 Senior Secured	
  US$652 mil term B bank ln due 2017          BB                 	
   Recovery Rating                            2                  	
  US$400 mil extended revlv bank ln due 2017  BB                 	
   Recovery Rating                            2                  	
	
	
	
	
Complete ratings information is available to subscribers of RatingsDirect on 	
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 	
by this rating action can be found on Standard & Poor's public Web site at 	
www.standardandpoors.com. Use the Ratings search box located in the left 	
column.

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