Moody's rates Chemtura notes Ba1

Moody's Investors Service said it assigned a Ba1 rating to Chemtura Corp.'s proposed $400 million of senior notes due 2016 and affirmed the Ba1 corporate family rating and the Ba1 ratings on the company's other debt. The outlook is negative.

Proceeds from the new notes will be used to refinance the $165 million senior unsecured floating-rate notes due 2010 and to reduce borrowings under Chemtura's revolver.

Moody's said the ratings reflect Chemtura's high pro forma leverage, challenges at the Plastic Additives segment and uncertainty surrounding the progress of integration and remaining legacy issues. Chemtura's pro forma leverage as of Dec. 31 was 3.5x EBITDA.

While much progress has been made in raising prices to cover higher raw material costs, the agency said this strategy has been challenged in the large Plastic Additives portion of Chemtura's business. As a result, profitable volumes were lost and steps are being made to restore volume and improve the non-flame-retardants Plastic Additives business.

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