Moody's affirms Borden Chemical

Moody's Investors Service said it affirmed the ratings of Borden Chemical Inc. Ratings affirmed include the company's $150 million floating-rate senior secured second-lien notes due 2010 at B3, $325 million fixed-rate senior secured second-lien notes due 2014 at B3, $175 million senior secured revolver due 2009 at B1, $440 million senior unsecured notes and debentures due 2016-2023 at Caa1, $47 million senior unsecured debentures due 2019 at Caa1, $34 million senior unsecured industrial revenue bonds due 2009 at Caa1, senior implied rating of B2, and senior unsecured issuer rating of Caa1.

Moody's said the ratings affirmation follows the company's announcement that it has signed a definitive agreement to acquire Germany-based Bakelite AG from its parent company, Rutgers AG. The purchase price is expected to range from $215 million to $245 million, and the company anticipates that the acquisition will be funded with add-on senior secured second-lien notes. The transaction is expected to close at the end of 2004 or early 2005.

The ratings affirmation reflects Moody's belief that it is unlikely that Borden's ratings will be downgraded due to this acquisition based on the fact that it is emerging from a trough in the chemical cycle. The ratings affirmation is also based on Moody's expectations that pro forma credit metrics will slightly improve and that liquidity will remain adequate.

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