CHICAGO, May 9 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has
reaffirmed the 'BBB' (Triple-B) rating assigned to The Geon Company's
outstanding senior unsecured debt. The Geon Company (NYSE: GON) and M.A.
Hanna Company (NYSE: MAH) announced today that they plan to merge in an all
stock purchase transaction. The Rating Outlook is Stable.
Geon's rating reflects the company's position as the largest polyvinyl
chloride (PVC) compounder in North America, its low cost structure and
management's commitment to a solid capital structure. Geon's stated strategy
has been to leverage considerable PVC compounding experience to grow and
diversify into a multi-polymer compounding company with global reach. The
Geon-M.A.Hanna combination will hold a much more diverse portfolio of
compounded polymer products and have additional cost savings and cross-selling
opportunities.
Operating earnings improvements based on raw materials purchasing,
cross-selling and overhead reductions are expected to total $50 million by
2002. Offsetting credit factors include the cyclical sensitivity of
end-markets, the potential for debt financed acquisitions, diversion of cash
flows for share repurchases and the potential for cyclical margin pressures as
raw material price increases outpace compound prices.
DCR expects credit statistics to remain in the 'BBB' range with no
appreciable change in credit protection measures as a result of the
transaction. Debt/EBITDA, on a pro forma basis, for the combined company
should be approximately 2.6 times and EBITDA/Interest should be approximately
6.0 times.
SOURCE Duff & Phelps Credit Rating Co.
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Related links:
http://www.dcrco.com
CONTACT:
Omar Jama, 312-606-2367, jama@dcrco.com, or
Bert Bierschenk, 312-368-3210, bierschenk@dcrco.com, both of Duff
& Phelps Credit Rating Co.
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