DUFF & PHELPS RATES ARCADIAN PARTNERS, ARCADIAN PARTNERS FINANCE CORPORATION; $340M 10.75 PERCENT SERIES A SENIOR NOTES DUE 2005 'BB-'
NEW YORK, May 24 /PRNewswire/ -- Duff & Phelps Credit Rating Co. announced today that it has assigned a rating of `BB-' (Double-B-Minus) to Arcadian Partners, L.P.'s (Arcadian) $340 million 10.75 percent Series A senior notes due 2005. The notes were issued in a private placement under Rule 144A. Approximately $100.5 million of the net proceeds from the notes were used to finance the purchase of the Lima, Ohio nitrogen chemicals business of BP Chemicals Inc. (BPC). Additional proceeds of about $168.0 million were used to refinance acquisitions and other debt associated with the March 1993 purchase of Fertilizers of Trinidad and Tobago Limited (FERTRIN) and Trinidad and Tobago Urea Company (TTUC). Remaining proceeds from the offering will also fund an $18.3 million debt service reserve for the notes, provide financing for certain de-bottlenecking projects at operating subsidiaries, and cover offering fees and expenses. The BPC, FERTRIN and TTUC acquisitions complement and expand Arcadian's existing nitrogen fertilizer business. With respect to the BPC acquisition, the Lima, Ohio plant provides Arcadian with an increased presence in the key cornbelt states of Indiana, Michigan and Ohio. The FERTRIN and TTUC acquisitions provide Arcadian's U.S. operations with ammonia feedstocks and urea products produced from regional natural gas at prices that approximate 50 percent of U.S. natural gas costs. On a consolidated basis and pro forma for these acquisitions, Arcadian reported 1992 net sales of $805.1 million and generated EBITDA of $148.6 million, covering pro-forma interest of $56.8 million by 2.62 times. The D&P rating primarily reflects the relative maturity of the U.S. fertilizer markets and likely volatility of agricultural demand based on weather patterns, fertilizer application rates and other variables. These factors are offset somewhat by Arcadian's leading position in the U.S. nitrogen fertilizer business, diversified geographic markets, increased economies of scale with the latest acquisitions, and strong component of relatively stable industrial sales which represented 42 percent of 1992 revenues. The rating also reflects Arcadian's increased leverage with the senior notes; on a pro forma basis at Dec. 31, 1992, total debt to capital was approximately 70 percent. In addition, the notes are structurally subordinated to $200 million of first mortgage notes and a $50 million secured bank revolver provided to Arcadian Fertilizer, L.P., Arcadian's principal operating subsidiary. Arcadian's structure as a master limited partnership also results in a high payout of current earnings which reduces the likelihood of an early reduction in leverage. Arcadian Partners, L.P. and its subsidiaries are a leading U.S. producer and marketer of nitrogen based fertilizer products including ammonia, dry urea and nitrogen solutions. Arcadian Partners Finance Corporation is a wholly-owned shell corporation formed solely to act as co-obligor for the notes. -0- 5/24/93 /CONTACT: Matthew D. Robbins, CFA, 312-368-3120, or Scott J. O'Shea, 212-908-0200, both of Duff & Phelps Credit Rating Co./ (UAN)
CO: Arcadian Partners, L.P. ST: IN: SU: RTG
TS -- NY084 -- 1841 05/24/93 16:15 EDT
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|Date:||May 24, 1993|
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