S&P rates Derby Buyer B, secured debt B+

S&P said it assigned a B issuer credit rating to Derby Buyer LLC, the borrower of proposed credit facilities.

At the same time, S&P assigned a B+ issue-level rating to the company’s proposed senior secured debt. The recovery rating is 2, indicating an expectation for substantial (70%-90%; rounded estimate: 70%) recovery in the event of a payment default.

The outlook is stable.

DuPont de Nemours Inc. entered into an agreement to sell its acetal homopolymer (HPOM) business, Delrin, to TJC LP for $1.8 billion. Following transaction close, TJC will own 80.1% of the new entity, while Dupont will roll a portion of its existing equity, retaining a 19.9% stake in the business.

The deal will be funded via a $655 million cash common equity contribution from TJC, $160 million in rollover equity from DuPont, a $700 million senior secured term loan maturing in seven years, a $175 million revolving credit facility (undrawn at close), and $350 million of seller financing maturing in eight years (with a holdco borrower).

“The stable outlook reflects our expectation that while volumes will remain lower in 2023 as a result of weaker demand and destocking in the auto supply chain, credit metrics will remain appropriate for the B rating over the next 12 months, with weighted average S&P Global Ratings-adjusted debt to EBITDA in the 6x range,” S&P said in a news release.

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