Research: Rating Action: Moody’s Assigns Polar US Borrower, LLC Revolving Credit Facility Rating B3


New York, August 23, 2022 — Moody’s Investors Service (“Moody’s”) has assigned a B3 rating to Polar US Borrower, LLC (dba Si Group, Inc.) $272.5 million senior revolving credit facility guarantee. The Revolving Credit Facility is increased by $250 million and the maturity has been extended from 2023 to 2027. The B3 Corporate Family Rating (CFR), B3-PD Probability of Default Rating (PDR) and the B3 rating on the senior secured term loan and the Caa2 rating on the senior unsecured notes remain unchanged. The outlook is stable.

“The extension of the maturity profile removes short-term rollover risk, as the revolving credit facility was expected to become current within a few months,” said Domenick R. Fumai, Moody’s vice president and principal analyst for Polar US. Borrower, LLC.


..Issuer: Polar US Borrower, LLC

….GTD Secured Senior Revolving Credit Facility, Assigned B3 (LGD3)


SI Group’s B3 rating is limited by continued high leverage with Moody’s Debt to Adjusted EBITDA ratio of 6.8x as of March 31, 2022. Nevertheless, SI Group’s financial performance has held up relatively well despite the challenging inflationary backdrop current. Moody’s expects sales growth to slow as global macroeconomic conditions ease, but should continue to post year-over-year increases. Although EBITDA has steadily improved, raw material price inflation and rising logistics costs have put pressure on margins, nevertheless raw material prices are expected to decline in the second half of 2022. Moody’s now expects the debt to EBITDA ratio, including standard adjustments, to be in the 6.5x-7.0x range in fiscal 2022, as opposed to the mid-7x. However, free cash flow is expected to remain negative due to higher working capital and increased capital expenditure to expand additive capacity at several plants.

The rating is also tempered by SI Group’s exposure to several cyclical end markets, including Automotive & Tires, Fuels & Lubricants, and Oilfield Solutions, which increases revenue and EBITDA volatility. as demonstrated by the company’s operating performance in fiscal 2020. In addition, several of the key raw materials, including phenol and isobutylene, are unpredictable and subject to significant price fluctuations which , despite the protection of long-term contracts, could put pressure on profitability.

The B3 rating is supported by SI Group’s extensive product portfolio. SI Group’s business profile is characterized by good scale relative to many similarly rated issuers, well-balanced geographic diversity and strong market positions serving a diverse number of end markets. SI Group benefits from the importance of its performance additive products to customers, making it difficult to switch suppliers, and resulting in long-term relationships with many of them exceeding 20 years. The credit profile also takes into account the improvement in the company’s cost structure following the merger of Addivant and Schenectady International Group in 2018, as it successfully exceeded synergy objectives, rationalized its portfolio by divesting low-margin non-core businesses such as industrial resins and making growth investments. initiatives such as the Lonestar project. The rating is further supported by SI Group liquidity of approximately $239 million as of March 31, 2022.

The stable outlook reflects Moody’s expectation that demand in the SI Group’s core end markets, such as rubber and adhesives, fuels and lubricants, and packaging, will exhibit lower volatility should economic conditions weaken. in the fourth quarter of 2022 or in 2023. The outlook also takes into account that the company will maintain sufficient liquidity of at least $200 million over the next 12 to 18 months.


Moody’s would likely consider a downgrade if leverage is consistently kept above 7.5x and free cash flow is negative for an extended period, if there is a significant deterioration in liquidity, or a large acquisition funded by loan or a dividend to the sponsor.

Moody’s would consider an upgrade if leverage, including standard Moody’s adjustments, is below 6.0x for an extended period, revenue and free cash flow growth remain positive, and the equity sponsor- investment demonstrates a commitment to more conservative financial policies.

Debt principal currently consists of a $272.5 million senior secured revolving credit facility maturing in 2027 and a $1.475 billion first lien senior secured term loan maturing in 2025, of which approximately $1.34 billion is outstanding as of March 31, 2022. The B3 rating on the senior term loan and revolving credit facility, identical to the CFR, reflects their still significant amount in the capital structure with only moderate loss absorption following the issuance of the senior unsecured notes. The senior term loan does not contain financial safeguard covenants while the revolving credit facility is subject to a spring-loaded total net leverage ratio test if utilization exceeds 35% at the end of the quarter. Moody’s does not expect the company to test the covenant in the next 12 months and believes that if triggered, SI Group would be in compliance. The revolving credit facility also has a maturity of 91 days prior to the maturity of the term loan in October 2025 and the maturity of the notes in May 2026. The Caa2 rating assigned to the senior unsecured notes reflects their subordinated position and the relatively low recovery prospects given the amount of secured notes. debt in the capital structure.

The main methodology used in this rating is Chemistry published in June 2022 and available at Otherwise, please see the Scoring Methodologies page on for a copy of this methodology.

Polar US Borrower, LLC is the flow-through entity of the ultimate parent company, SK Mohawk Holdings, LLC, a subsidiary of private equity firm SK Capital Partners. SI Group manufactures performance additives for use in polymers, rubber, lubricants, fuels, adhesives, surfactants in addition to certain specialty chemicals. The company serves a wide range of industries, including pharmaceuticals, plastics, automotive, oil and gas. SI Group generated revenues of approximately $2.0 billion for the fiscal year ending December 31, 2021.


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Domenick R. Fumai
Vice President – Senior Analyst
Corporate Finance Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

Karen Nickerson
Associate General Manager
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

Release Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
JOURNALISTS: 1 212 553 0376
Customer service: 1 212 553 1653

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