S&P Global Ratings upgraded the debt ratings on Olin Corp., the parent of Winchester, due to its debt repayment and improving credit measures,
S&P said, “We expect that Olin Corp. will significantly improve its 2021 EBITDA and credit measures to levels well beyond our previous forecast, supported by its material debt repayment, its improving profitability stemming from management’s new electrochemical unit (ECU) optimization initiatives and an ongoing cyclical upturn related to the global macroeconomic recovery. Therefore, we raised our issuer credit rating on Olin to ‘BB+’ from ‘BB’. At the same time, we raised our issue-level rating on the company’s unsecured notes to ‘BB+’ from ‘BB’ and revised our recovery rating to ‘3’ from ‘4’. The ‘3’ recovery rating indicates our expectation for meaningful (50 percent-70 percent; rounded estimate: 65 percent) recovery in the event of a payment default. Concurrently, we lowered our issue-level rating on Olin’s term loan and revolving credit facilities to ‘BB+’ from ‘BBB-‘ and revised our recovery rating to ‘3’ from ‘1’. These facilities are now unsecured and pari passu with the company’s unsecured notes following the termination of the security agreement that provided guarantees and collateral securing the facilities.”
S&P said its stable outlook reflected its expectation that Olin’s significant free cash flow generation in 2021, which it will primarily use for debt repayment, will lead to a material and sustainable improvement in its weighted-average credit metrics. S&P now expects the company to maintain weighted-average funds from operations (FFO) to debt of more than 30 percent, including FFO to debt of about 45 percent in 2021.
Photo courtesy Winchester
