Moody's gives Groupe Solmax, loan B2

Moody's Investors Service said it gave first-time ratings to Groupe Solmax Inc., consisting of a B2 corporate family rating, B2-PD probability of default rating and a B2 rating for the $535 million term loan and $100 million revolver.

The rating benefits from a diversified business model through multiple geosynthetic product types with significant geographical diversification, exposure to numerous end markets including infrastructure, waste management, mining and construction, a diverse customer base with the top 10 customers making up less than 25% of revenue and which include several large mining and waste management companies among other factors, Moody’s said.

Solmax’s B2 rating is limited by its relatively short financial history with size and scale largely achieved in 2018 following a sizable acquisition, the agency said, and high pro-forma leverage (adjusted debt/EBITDA of 5x at transaction close) the agency said it sees remaining at this level through 2022 among other issues.

Solmax will use the term loan proceeds and an equity contribution from its sponsors to buy TenCate Geosynthetics from Royal Ten Cate and to repay all of Solmax's debt. “The Royal Ten Cate geosynthetics business generated about $380 million (€310 million) of revenues in 2020 (about 30% of RTC's total revenues) and will roughly double Solmax's EBITDA,” Moody’s said in a press release.

The outlook is stable.

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