Fitch Ratings Affirms Valhi & Kronos International's Debt Ratings.Business Editors CHICAGO--(BUSINESS WIRE)--June 3, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed Valhi's unsecured rating of 'BB-' and Kronos International Inc.'s senior secured rating of 'BB'. As a result of Valhi's redemption of all outstanding senior LYONs, NL Industries' full redemption of 11.75% senior secured notes, and Valcor's full redemption of 9 5/8% senior unsecured notes, Fitch has withdrawn Valhi's senior LYONs rating of 'BB-', NL Industries' senior secured debt rating of 'BB', and Valcor's senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. rating of 'B+'. Also, Fitch has assigned a rating of 'BB-' to Valhi's senior secured credit facility. The Rating Outlook remains Stable. The ratings affirmation for Valhi and Kronos International, a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of NL Industries, reflects solid operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from the titanium dioxide (TiO2) operations throughout 2002 into 2003. NL Industries' TiO2 business accounts for approximately 80% of Valhi's reported sales and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become . Companies throughout the TiO2 industry experienced severe price erosion for TiO2 pigments from 2001 into the first half of 2002. During the second half of 2002 TiO2 prices started to stabilize and into 2003 prices have been on the rise. Excluding the effects of foreign currency fluctuations, NL Industries reported a 6% increase in average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for the three month period ending March 31, 2003 compared to the same period last year. Also, excluding the effects of foreign currency fluctuations, the company reported a 1% increase in TiO2 prices compared to the three month period ending December 31, 2002. Even though reported EBITDA for both companies has been on a downward trend, they have maintained sufficient liquidity through cash balances and unused available credit lines. Valhi and its subsidiaries have no significant maturities until 2009. Credit statistics for Valhi and Kronos International remain solid for the rating category with interest coverage of 3.5 times (x) and 4.1x, respectively, for the trailing 12-month period ending March 31, 2003. As reported Valhi's total debt at the end of the first quarter was approximately $631 million of which $349 million resides at Kronos International. Valhi and Kronos International had a leverage ratio of 4.0x and 3.6x, respectively, for the trailing 12-month period ending March 31, 2003. The Stable Rating Outlook indicates the likelihood that both companies' near-term financial performance should remain steady despite the downward trend in margins and operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before over the past few years. Fitch expects Valhi's revenue and EBITDA to be slightly better in 2003 compared to 2002 levels due to expected margin stabilization in non-chemical operations and improved profitability in TiO2 operations driven by moderate increases in the average selling price. Valhi Inc. is a holding company with ownership stakes in: NL Industries, a producer of titanium dioxide pigments; CompX, a producer of locks and ball bearing slides serving the office furniture industry; TIMET, a producer of titanium metals Titanium metals may mean:
Any solid, liquid, or gaseous waste materials that, if improperly managed or disposed of, may pose substantial hazards to human health and the environment. Every industrial country in the world has had problems with managing hazardous wastes. disposal services. Valhi generated over $1.1 billion of sales in 2002 and reported EBITDA of approximately $153 million in 2002. |
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