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Report | August 2015

Archroma acquires BASF textile chemicals business

The acquisition further solidifies Archroma´s position as a clear industry leader in supplying chemicals and dyes to the global textile industry.
Archroma has announced that it has closed the acquisition of BASF´s global textile chemicals business. This is the second strategic transaction by Archroma following its corporate carve-out from Clariant in 2013, after previously acquiring a stake in the textile dyes and chemicals manufacturer M. Dohmen in 2014.

BASF business delivers products and technologies across the entire textile chemicals spectrum, with particular strengths in printing, finishing and coating chemicals. The acquisition strategically complements Archroma´s product portfolio and geographical presence that will now include BASF´s strong market positions in Asia and several other high-growth markets. The combined textile chemicals businesses will continue their history of maintaining a strong commitment to innovation and sustainability.

´The textile industry is undergoing transformational change resulting from macro supply and demand shifts as well as a growing customer demand for sustainably-oriented solutions´ said Alexander Wessels, CEO of Archroma. He added: ´The operational and intellectual synergies between BASF and Archroma will allow us to offer our customers the full breadth and depth of innovation, quality, reliability, expertise and market coverage they need to prosper in these market conditions.

About 225 employees globally are in the scope of the transaction, of which approximately 175 are located in Asia. The combined textiles businesses will remain headquartered in Singapore, close to customers in Asia´s fast-growing textile markets. The closing of the transaction for the legal entity BASF Pakistan (Private) Ltd., Karachi in Pakistan is expected to take place in August 2015. Archroma is a portfolio company of US-based private investment firm SK Capital Partners.

In the meanwhile, Archroma has also entered into a senior secured credit agreement that provides for credit facilities totaling approximately $515 million. The credit facilities are comprised of a $75 million multi-currency revolving credit facility, a $220 million senior secured term loan and a EUR 200 million senior secured term loan.

Bank of America Merrill Lynch International Limited and HSBC Bank plc acted as Global Coordinators, Bookrunners and Mandated Lead Arrangers for the senior secured credit agreement. ICICI Bank UK plc acted as Bookrunner and Mandated Lead Arranger. Credit Suisse AG and UBS Switzerland AG acted as Mandated Lead Arrangers and Mizuho Bank, Ltd. and Itau BBA International plc acted as Lead Arrangers. The new credit facilities will be used to refinance Archroma´s existing debt, as well as to support the acquisition of BASF´s textile chemicals business announced on July 1, 2015.

Moody´s and Standard Poor´s have published their respective ratings for the Archroma group and its new credit facilities. In a report issued on June 15, 2015, Moody´s, the investor service agency, assigned a B2 corporate family rating to SK Spice Holding Sarl, the ultimate parent company of the Archroma group. Moody´s also assigned a B2 rating to the loan and credit package. The outlook on all ratings by Moody´s is stable. In its report, Moody´s comments that the stable outlook reflects its expectation that Archroma will maintain adequate liquidity, smoothly integrate the BASF textile chemicals business after the intended acquisition closes, and execute on its current rationalization and cost efficiency programs.

Standard & Poor´s announced on June 18, 2015 that it had assigned a preliminary ´B´ long-term rating, with stable outlook, to SK Spice Holding Sarl (Archroma) and a ´3´ recovery rating to the term loans.

´The successful refinancing and ratings issued by Moody´s and Standard Poor´s are consistent with Archroma´s current size, revenue and profitability,´co

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