SI Group’s debt exchange leads to another default – Fitch

HOUSTON (ICIS)–SI Group completed another debt exchange, which led Fitch Ratings to determine that the company defaulted again, the ratings agency said on Wednesday.

Fitch considered SI Group’s offering a distressed debt exchange and found that the company was once more in restricted default. Fitch has since rated SI Group CCC, which is four notches above default.

During the first half of 2024, SI Group saw declines in sales and earnings before interest, tax, depreciation and amortization (EBITDA), Fitch said. The declines were caused by weak demand, destocking in 2023 and increased competition from new plants in China.

Sales volumes should remain low and free cash flow should remain negative throughout Fitch’s forecast horizon. SI Group could face a liquidity crisis, and it may need fresh third-party support within the next 24 months, Fitch said.

SI Group makes specialty chemicals used in coatings, adhesives, sealants and elastomers (CASE) as well as in lubricants, fuels, surfactants and polymers.

Other chemical companies are also coming under increased stress from low-cost imports.

INEOS Styrolution plans to shut down a plant in Addyston, Ohio state, US, that makes acrylonitrile butadiene styrene (ABS) and styrene acrylonitrile (SAN). Decommissioning will start in the second quarter of 2025.

INEOS Styrolution is also permanently shutting down a styrene plant in Sarnia, Ontario province, Canada. That plant was idled earlier this year after complaints about benzene emissions, which led to a dispute with regulators.

In addition, China, once a key outlet for North American styrene, has added significant styrene capacity over the past three years.

Additional reporting by John Donnelly