Fitch Ratings Affirms Valhi & NL Industries' Debt Ratings.Business Editors CHICAGO--(BUSINESS WIRE)--March 26, 2002 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 senior unsecured and senior secured debt rating of 'BB-' and NL Industries' (NL) senior secured rating of 'BB'. The Rating Outlook is Stable. Valhi and NL credit statistics were strong for the rating level again in 2001 and are expected to remain strong near-term given modest debt levels and the outlook for titanium dioxide profitability in the coming year. Net debt levels at the Valhi level have remained low in 2001 and so far in 2002. At Dec. 31, 2001, Valhi cash and securities exceeded $200 million, while gross debt was $608 million. Valhi's $250 million Snake River bonds, included in gross debt, are offset by an equity interest in, and a note receivable note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. from, the Snake River Sugar Company. Valhi's 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 for 2001 was $309 million (2001 EBITDA $262 net of a securities gains) against gross interest of about $62 million. While Valhi and NL's current credit statistics are fairly strong for the rating, Fitch expects that at some point Valhi might pursue an acquisition or a restructuring transaction that could significantly change the credit profile of Valhi and/or NL. For example Valhi recently pursued a transaction that would have exchanged a portion of its stake in NL for a stake in Titanium Metals Corporation Titanium Metals Corporation NYSE: TIE, founded in 1950, is a leading manufacturer of titanium-based metals products, focusing primarily on the aerospace industry. Its major U.S. (TIMET), in the process structurally subordinating Valhi to TIMET. Titanium dioxide industry profitability is related to capacity utilization rates. Titanium dioxide prices were on a positive trend in 2000 before declining in 2001 as cyclically sensitive demand declined. Fitch's 2002 outlook is for demand to stabilize and to start to trend back upwards, possibly leading to increasing prices by the end of the year. Overall 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. for NL should be flat to slightly down in 2002. NL is named in a variety of lead paint related lawsuits initiated by the State of Rhode Island Rhode Island, island, United States Rhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. , the City of Milwaukee and other cities. Several other former lead pigment producers are also named in the lawsuits. Lead paint litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. of this nature has been ongoing since the 1980's with limited success. The ratings do not anticipate significant net cash outflows in the near-term for NL, although it is difficult to rule this possibility out. 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 products, and Waste Control Specialists; a provider of hazardous waste Hazardous waste 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. |
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