Nexeo Solutions, LLC -- Moody's: Nexeo's incremental debt will facilitate Archway acquisition

New York, February 12, 2014 -- Nexeo Solutions, LLC's (Nexeo) proposed $170 million term loan add-on will facilitate the $125 million proposed acquisition of Archway Sales, Inc. (Archway; announced February 11, 2013) and reduce revolver borrowings. Nexeo's announcement of the acquisition comes one day after we rated the incremental term loan and revised Nexeo's outlook to negative. Nexeo's elevated leverage, weak margins (EBITDA margins below 4%) and willingness to undertake additional acquisitions triggered our move to a negative outlook. If by the end of 2014, Nexeo does not reduce leverage back below 6.0 times (pro forma for Archway) and increase EBITDA margins to 4%, we would likely lower the company's Corporate Family Rating to B3.

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