Morningstar DBRS Assigns Credit Rating of B (high) With a Recovery Rating of RR6 and a Positive Trend to Mattr Corp.’s New Debt Issuance

DBRS Limited (Morningstar DBRS) assigned a credit rating of B (high) with a recovery rating of RR6 and a Positive trend to Mattr Corp.’s (Mattr or the Company; rated BB with a Positive trend by Morningstar DBRS) $175 million 7.250% Senior Unsecured Notes (the Notes) due 2031, which closed on April 2, 2024.

The credit rating assigned to this newly issued debt instrument is based on the credit rating of an already-outstanding debt series of the above-mentioned debt instrument.

The Notes are direct and unsubordinated unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future unsecured senior indebtedness. Morningstar DBRS expects the net proceeds of the Notes issuance will be used by the Company to redeem its existing 9.000% Notes due 2026 and for any associated fees and expenses.

Mattr’s credit ratings are supported by the Company’s predominant leadership position in both of its business divisions, diminished exposure to the volatile pipe coating business, the Company’s diverse customer and geographic bases, strong technical expertise, and favourable long-term economic trends that should continue to support the business risk profile over the medium to long term. The credit ratings also consider Mattr’s relatively small scale, especially post the sale of the pipe coating division, fluctuating cost of raw materials, and the still-budding but growing water tank business.

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 Risk Factors in Credit Ratings (January 23, 2024) at https://dbrs.morningstar.com/research/427030.

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of Mattr, the relative weighting of the BRA factors was approximately equal.

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

(C) Weighting of the BRA and the FRA
In the analysis of Mattr, 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 (February 14, 2023), https://dbrs.morningstar.com/research/409775

The following methodology has also been applied:
-- DBRS Morningstar Global Criteria: Recovery Ratings for Non-Investment-Grade Corporate Issuers (August 30, 2023), https://dbrs.morningstar.com/research/420063/

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/397223.

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 ratings were initiated at the request of the rated entity.

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

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

These are solicited credit ratings.

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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