Home / Business and Economy / Fraud Hit Archroma Nears $1B Debt Extension
Fraud Hit Archroma Nears $1B Debt Extension
2 May
Summary
- Archroma is extending $1 billion of debt with sweetened terms.
- The company revealed a $37 million loss due to fraud recently.
- This debt deal faces delays amid market uncertainty and fraud.
Archroma, a specialty chemicals producer, is enhancing terms on a significant junk loan deal to refinance around $1 billion of its debt. The transaction, backed by SK Capital, has encountered several delays over the past month, with new investor commitments now due next week.
This refinancing effort is critical as Archroma's existing debt matures in just over a year. Investor caution has been heightened by the conflict in the Middle East and a broader slowdown impacting the chemicals sector. Further complicating matters, Archroma recently reported a loss of approximately $37 million due to fraud, although the company expressed optimism about recovering a substantial part of these funds.
The revised deal involves extending around $800 million of first-lien loans by three years to 2030, while issuing $200 million in second-lien debt. This structure reduces leverage at the senior level, making it more appealing to first-lien lenders. Investors in the riskier second-lien debt will receive higher interest rates, including payment-in-kind components, easing immediate cash flow pressure on Archroma.
Archroma, headquartered in Switzerland, supplies chemicals for the textiles, packaging, and paper industries. Weakness in these end markets and broader pressures on the European chemicals market had previously led to a decline in the price of Archroma's loans.
