TEXT-S&P report addresses questions on Cabot rating affirmation

Fri Jul 20, 2012 9:27am EDT

July 20 - After Cabot Corp. (BBB+/Negative/--) recently announced its plan to acquire Norit N.V. (not rated), the parent company of Norit Holding B.V. (B+/Watch Pos/--), in a $1.1 billion largely debt-funded transaction, Standard & Poor's Ratings Services affirmed its ratings on Cabot. In a report titled "Credit FAQ: Why Standard & Poor's Affirmed Its 'BBB+' Rating On Cabot Corp.," we answer questions on our rating action and what we expect when Cabot completes the acquisition.

Cabot is a large global producer of carbon black (a petroleum product used primarily as a pigment and in auto tires).

On July 9, 2012, Standard & Poor's affirmed its ratings on Cabot, including its 'BBB+' corporate credit rating. Our rating outlook is negative. We removed all ratings from CreditWatch with negative implications, where we placed them on June 21 following Cabot's announcement.

We expect the acquisition to close by fiscal year end (Sept. 30, 2012). Cabot plans to fund the acquisition using $600 million in notes, $250 million of borrowings under a $750 million revolving credit facility, and $250 million of cash on the balance sheet. We expect the revolving credit facility to increase to $750 million from $550 million.

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