Moody’s rates Venator Materials Caa1

Moody's Investors Service said it assigned a Caa1 corporate family rating and a Caa1-PD probability of default rating to the new Venator Materials plc. At the same time, Moody's assigned a B3 rating to the backed senior secured first-out term loan and a Caa1 rating to the backed senior secured exit term loan issued by the new Venator Materials LLC and new Venator Finance Sarl. The outlook is stable.

“Venator's Caa1 CFR reflects the challenging market conditions in the TiO2 sector, the company's depressed earnings and continued cash outlays for business restructuring in Europe. The company emerged from Chapter 11 in October 2023 with a substantial reduction in reported debt from $1 billion to just above $300 million expected at the end of 2024. Such a debt level would support a higher rating assuming mid-cycle earnings.

“However, the lingering weakness in TiO2 demand and the company's high-cost position in Europe could result in negative free cash flows and constrain its financial flexibility, thus elevating credit risk, in the next several quarters before a potential recovery in earnings through demand rebound and business restructuring. The recently issued $100 million first-out term loan does provide additional liquidity, but has a tenor of only two years,” Moody’s said in a press release.

The outlook “reflects management efforts to restructure the business, improve earnings and reduce cash consumption, along with an expected recovery in TiO2 demand in the next 12 months,” the agency said.

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