Morningstar DBRS Finalizes Provisional Credit Rating of BB With a Stable Trend on Chemtrade Logistics Inc.'s Senior Unsecured Notes

DBRS Limited (Morningstar DBRS) finalized its provisional rating of BB with a Stable trend and a Recovery Rating of RR5 on Chemtrade Logistics Inc.'s (Chemtrade or the Company, rated BB (high), Stable) Senior Unsecured Notes (the Notes), which closed on August 28, 2024.

The $250 million 6.375% Notes, due in 2029, are senior unsecured obligations, and will rank pari passu in right of payment with any existing and future senior Indebtedness, and senior in right of payment to all existing and future Subordinated Indebtedness of the Issuer. The Notes are effectively subordinated to all senior secured indebtedness, including Indebtedness under the Company's existing Credit Agreement. The Notes will be fully and unconditionally guaranteed, jointly and severally, on an senior unsecured basis by the Parent and Restricted Affiliates which accounted for more than 90% of Chemtrade's total assets and more than 95% of Chemtrade's total revenue as at and for the six-month period ended June 30, 2024, and certain future Restricted Affiliates.

The net proceeds from the Notes are expected to be used for the repayment of existing indebtedness under the Credit Agreement and for general corporate purposes.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (13 August 2024) https://dbrs.morningstar.com/research/437781

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)

(A) Weighting of BRA Factors
In the analysis of Chemtrade Logistics Inc. the relative weighting of the BRA factors was approximately equal.

(B) Weighting of FRA Factors
In the analysis of Chemtrade Logistics Inc., the relative weighting of the FRA factors was approximately equal.

(C) Weighting of the BRA and the FRA
In the analysis of Chemtrade Logistics Inc., the BRA and the FRA carry approximately equal weight.

Notes:
All figures are in Canadian dollars unless otherwise noted.

Morningstar DBRS applied the following principal methodology:

Global Methodology for Rating Companies in the Industrial Products Industry (15 April 2024)
https://dbrs.morningstar.com/research/431173

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (April 15, 2024) - https://dbrs.morningstar.com/research/431186 which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodology has also been applied:

-- Morningstar DBRS Global Corporate Criteria (April 15, 2024)
https://dbrs.morningstar.com/research/431186
-- Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit rating was not initiated at the request of the rated entity. The credit rating was initiated at the request of a third party.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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