Morningstar DBRS Places Mattr Corp. Credit Ratings Under Review With Developing Implications Following Its Announced Definitive Agreement To Acquire AmerCable

DBRS Limited (Morningstar DBRS) placed all ratings of Mattr Corp. (Mattr or the Company, formerly Shawcor Ltd.) Under Review with Developing Implications. This follows from the Company's November 08, 2024, announcement of definitive agreement to acquire all the outstanding shares of AmerCable Incorporated ("AmerCable") from Nexans USA Inc. for a purchase price of US$280M ($390M; the Transaction). The Transaction is subject to customary conditions and regulatory approvals and is expected to complete in less than three months.

The Under Review with Developing Implications status reflects Morningstar DBRS's expectations that the acquisition will enhance Mattr's wire and cable business exposure within the U.S. market. The acquisition should also broaden the existing portfolio and add to the North American manufacturing capabilities potentially bolstering long-term growth and margin outlook. In addition, the review also considers Morningstar DBRS's expectations of increased leverage and a material weakening of the financial profile.

Morningstar DBRS intends to resolve the Under Review with Developing Implications status by or around the close of the Transaction. In its review, Morningstar DBRS will focus on (1) assessing the business risk profile of the combined entity; (2) the risks associated with integration and realization of potential synergies; (3) proforma financial risk profile; and (4) the Company's longer-term business strategy and capital structure plans.

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 (August 13, 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 Mattr Corp., the relative weighting of the BRA factors was approximately equal. 

B) Weighting of FRA Factors
In the analysis of Mattr Corp., the relative weighting of the FRA factors was approximately equal. 

C) Weighting of the BRA and the FRA
In the analysis of Mattr Corp., 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 (April 15, 2024)
https://dbrs.morningstar.com/research/431173

Morningstar DBRS credit ratings may use of 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 methodologies have also been applied:

Morningstar DBRS Global Corporate Criteria (April 15, 2024)
https://dbrs.morningstar.com/research/431186

Morningstar DBRS Criteria: Approach to ESG 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 initiated at the request of the rated entity.

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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