The '12 bonds of JohnsonDiversey Holdings, an industrial cleaning products maker, fell two points from 101.00 to 99.00 last week as the company announced a restructuring plan. The company's '13 bonds did not move at all, remaining at 73.75 through Thursday.
The total cost of the restructuring process is predicted to be anywhere from $345-370 million. The company profile is also expected to be weak during the restructuring, JohnsonDiversey said in a released statement. The restructuring of the business is to include the loss of around 1,350 jobs, one-tenth of its workforce, and the sale of several factories worldwide.
Following the drop in the company's bonds and the restructuring plan announcement, Standard & Poor's cut the ratings of the Sturtevant, Wis.-based company's corporate credit rating from BB- to B+. Additionally, S&P has affirmed JohnsonDiversey's short term rating at B-2 with a stable outlook.
"The downgrade follows JohnsonDiversey's announcement of a sweeping two-to-three year restructuring plan that will involve the closure of a significant number of manufacturing and other facilities, major workforce reductions and the potential divestiture of or exit from certain non-core or underperforming businesses," explained Cynthia Werneth, credit analyst at S&P.
The company's proposed senior secured credit facilities, which total just over $1 billion, were also rated by S&P. The facilities were rated at B+ and assigned a recovery rating of 3, which means that should JohnsonDiversey default, bank lenders will be able to recover 50-80% of principal on average. Upon the completion of the restructuring of its business, JohnsonDiversey will have the current rating of its bank loans removed by S&P. Officials at JohnsonDiversey declined to comment.