TEXT-S&P rates Church & Dwight's proposed notes 'BBB'
Sept 19 - Standard & Poor's Ratings Services said today that it assigned its 'BBB' senior unsecured debt rating to Princeton, N.J.-based Church & Dwight Co. Inc.'s proposed $400 million notes due 2022. We expect the proposed notes to be issued under the consumer products company's Rule 415 shelf registration statement filed May 12, 2010. We expect the company to use net proceeds from the note issuance, in combination with commercial paper borrowings, to finance the acquisition of Avid Health Inc. Pro forma for the notes and incremental commercial paper borrowings to complete the acquisition, total debt outstanding is about $932.2 million as of June 30, 2012. All of our existing ratings on Church & Dwight, including the 'BBB' long-term and 'A-2' short-term corporate credit rating, are unchanged. The outlook is positive. Our assessment of Church & Dwight's financial risk as "intermediate" incorporates the assumption that its credit ratios will weaken over time--most likely due to debt-financed acquisitions--including total leverage in the low-2x area and funds from operations (FFO) to total debt in the 35% to 40% range. Pro forma for this debt-financed acquisition, we estimate leverage and FFO to total debt of about 1.6x and 45%-50%, respectively, levels which are consistent with our "modest" financial risk descriptor. Our assessment of the company's business risk as "satisfactory" incorporates its diverse product portfolio within the household and personal care sector, its established consumer brands, and market share gains that we partly associate with a sizable mix of value offerings. RELATED RESEARCH AND CRITERIA -- Bulletin: Church & Dwight Co. Inc.'s Plans To Acquire Avid Health Don't Affect Ratings, Aug. 21, 2012 -- General Criteria: Understanding Standard & Poor's Rating Definitions, June 3, 2009 -- Business Risk/Financial Risk Matrix Expanded, May 27, 2009 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 RATING LIST Church & Dwight Co. Inc. Corporate credit rating BBB/Positive/A-2 Rating Assigned Church & Dwight Co. Inc. Senior unsecured $400 million notes due 2022 BBB Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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